Stephen Hester: the Mr Fixit of financial services

When Stephen Hester stepped down as chief executive of Royal Bank of Scotland last September, he did so under a bit of a cloud - and swearing blind that he would not be taking another job in financial services.

His five-year stint trying to turn RBS around after its 2008 collapse and state bailout had been partially successful. The bank had been de-risked and shrunk dramatically.

But Mr Hester ended up in such a feud with his majority shareholders in the UK government - and to an extent, too, with regulators at the Prudential Regulation Authority - that he longed to be out of banking for ever. He was desperate for a long holiday and had a vague plan to reinvent himself thereafter in some more benign industry.

His holiday went ahead as planned: he spent weeks on end indulging one of his favourite hobbies of skiing from his holiday home in Verbier in the Swiss Alps.

However, his job selection has not gone quite as expected - and has confounded his friends.

The truth is that Mr Hester, 53, was never going to take an undemanding job. And taking on RSA - and the challenges thrown up by the scandal at its Irish unit - fits his skills well.

Above all else, the role will cement Mr Hester's reputation as the Mr Fixit of British business.

After a successful career in investment banking, largely at Credit Suisse, his first fix-it role came at Abbey National, where he was appointed finance director, then chief operating officer. He was instrumental in dealing with the troubled lender's commercial lending woes, which facilitated Abbey's sale to Spain's Santander in 2004.

For his second turnround challenge, Mr Hester left the banking industry and ventured into property. As chief executive of British Land, the no-nonsense northerner helped to overhaul the governance of a company that had previously been run almost as a private fiefdom of previous boss Sir John Ritblat.

Again his mission was largely accomplished, with British Land coming through the beginnings of the financial crisis with a large cash buffer generated through aggressive property divestments.

Property experts are divided as to whether his strategy was canny, and helped the company avoid collapse, or shortsighted. Some divestments were made at valuation low points, allowing their buyers to prosper from the rebound in values.

But the balance of opinion, certainly, was that Mr Hester was a man to be relied upon in a crisis. And, at the end of 2008, as the government was midway through sinking £45bn of taxpayers' money into the rescue of RBS, there was no more pressing crisis than finding a new chief executive to replace the disgraced Fred Goodwin.

His stint at the bank will be best remembered for his oversight of the wind-down of more than £200bn of "non-core" assets - a combination of bad loans and capital-intensive investments that RBS could no longer afford to hold. Mr Hester frequently characterised his role as that of a bomb disposal expert defusing a dangerous explosive.

By comparison, his fourth mission looks small. RSA is a fraction of the size of RBS. Even after the bank's five-year shrinkage programme, its market capitalisation is still ten times that of Mr Hester's new employer.

It will be his third big switch of sector. Although Mr Hester has had some experience at overseeing an insurance business - RBS is midway through the divestment of home and motor insurer Direct Line - he may find getting to the bottom of RSA's problems, and its £200m black hole, will prove difficult. It already appears to be case obscured by the insurance industry's complexity and notoriously abstruse accounting.

Friends say that intellectual challenge may well have been the key draw that made the banker go back on his determination to quit financial services for good.

Those who know Mr Hester well are in little doubt that he will excel at the job, identifying the problems, dealing with them effectively and then, in all likelihood, selling the insurer to the highest bidder.

Aside from the satisfaction of accomplishing a fourth fix-it mission, Mr Hester can expect a remuneration package worth up to £5.3m a year - and no government shareholder to put the kibosh on it.

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