Budenberg appointed UKFI chief executive

Former UBS banker Robin Budenberg has been appointed chief executive of UK Financial Investments, the body established to manage the UK government's investments in financial institutions including the Royal Bank of Scotland (RBS), Lloyds TSB and Northern Rock.

Budenberg will replace John Kingman, who had served as chief executive of UKFI since the body's inception on November 3, 2008. Kingman, who previously served as second permanent secretary to the UK Treasury, announced his intention to leave UKFI in July.  There will be a short handover period, with Budenberg expected to take full charge in December.

A qualified chartered accountant, Budenberg joined SG Warburg, the London-based investment bank, in 1984. He stayed with its successor firms when SG Warburg merged with the Swiss Banking Corporation and then UBS in the nineties. Since 1997, Budenberg was responsible for senior UK client relationships at UBS. He also advised on the UK government's bank recapitalisation scheme in October 2008, which saw UK taxpayers take substantial stakes in RBS and Lloyds TSB.

Separately, the European Commission (EC) today approved a restructuring plan for Northern Rock, splitting the institution into a "good" bank and a "bad" bank. The "good" bank is expected to consist of Northern Rock's retail deposit book - which stood at approximately £19.5 billion in May - along with various cash assets and unencumbered mortgage assets. The "bad" bank will contain the remnants of Northern Rock's mortgage book and its wholesale funding instruments, and will look to manage an orderly liquidation of the assets.

"The failure of Northern Rock would have had major detrimental effects on the UK mortgage market and the overall financial stability of the UK economy. Important structural changes, including the split of the bank into two entities and a significant reduction of its market presence, will allow the bank to become viable in the long-term and limit distortions of competition," said Neelie Kroes, competition commissioner at the EC.