Now lend more, RBS is ordered: After forcing Hester to quit, Osborne tells bank to help small business RBS chief executive Stephen Hester forced out in a George Osborne 'coup' Departure wiped £650million of bank's value on FTSE100 Treasury denied Hester removed to pave way for pre-election 'fire-sale' Ministers said under new regime RBS expected to lend to small businesses By Jason Groves and Becky Barrow RBS outgoing chief Stephen Hester was removed in a 'coup' staged by George Osborne Royal Bank of Scotland's new boss will be ordered to lend billions more to struggling businesses after George Osborne staged a "coup" to remove its chief executive Stephen Hester. A day after Mr Hester's departure was announced, the troubled banking giant was the biggest faller on the FTSE100, initially losing more than 6 per cent of its value in early trading. Shares rallied later but £650million was wiped off the value of the bank, which is 81 per cent owned by the taxpayer, following George Osborne's political gamble. City concern was intensified by speculation the bank's chairman, Sir Philip Hampton, could follow Mr Hester through the exit door next year. The Treasury denied Labour claims that Mr Hester had been removed to pave the way for a pre-election "fire sale" of RBS, which received a £45billion taxpayer bailout. But ministers did make it clear the new regime at RBS would be expected to increase lending to Britain's small businesses. Treasury minister Sajid Javid told MPs that small business lending would become "even more prominent in RBS's strategy." Last night David Cameron told the financial website Bloomberg that voters were more interested in getting their money back than a quick return to the private sector. "It will take time, because this is a bank that is still healing," the Prime Minister said. As for when we get it back into the private sector, I just have two very simple concerns - one is we must make sure this bank contributes to the recovery of the UK economy. Secondly, people put their money in. I want them to get their money out. A total of £650million was wiped off the value of RBS after George Osborne's political gamble Vince Cable (pictured with Osborne) launched an attack on RBS's lending record What happens now to RBS? George Osborne believes it is time for RBS to move from the "rescue phase" to the "next stage." This means preparing the bank for a return to the private sector and making it lend more to business to boost the economy. The future for both RBS and Lloyds banking group will be made clear next week when the Chancellor gives his annual speech at Mansion House in London on the state of the economy. What are the privatisation options? One is to test the market in the near future by selling off a tranche of RBS shares to taxpayers - similar to the "Tell Sid" privatisation of British Telecom in the 1980s. Another option is to divide RBS before privatisation. It would be split into a "good bank," which would lend to businesses and households and a "bad bank" which would contain all the toxic assets, and dispose of them separately. This proposal is supported by several members of the Banking Commission, including Archbishop of Canterbury Justin Welby and former chancellor Lord Lawson. What does the Chancellor think? Mr Osborne has made it clear in the past that he is opposed to splitting the bank in two, as it would be expensive, time-consuming and complex. But some believe he may warm to the idea if its forces RBS to lend more. Will taxpayers get their money back? This is the big question. Taxpayers are currently sitting on a £17billion loss on their 81 per cent stake in RBS. They may yet get the bulk of their money back but there is growing speculation the Coalition is softening up the public to sell shares at a loss, pinning the blame on the last Labour government for paying too much for its stake in RBS and Lloyds when they were bailed out during the financial crisis. RBS has indicated it wants to start selling off shares by the end of next year. But Treasury insiders are now insisting there is "no rush." Earlier this week Business Secretary Vince Cable launched an attack on the bank's lending record, saying entrepreneurs were becoming even "angrier" at the lack of available credit. RBS remains Britain's biggest business lender. But despite pressure from ministers, the bank's net lending has fallen by £4billion in the last 12 months. Mr Cable said the economy was being held back by "this highly centralised, dysfunctional banking structure." Mr Hester yesterday defended RBS's lending record, saying the bank had done a "terrific job" and was "pulling its weight" on lending. The major banks insist they are willing to lend and warn that using credit to prop up unviable firms will end in trouble. But the Chancellor is understood to have come round to the viewpoint of Mr Cable, who has long seen the refusal of the banks to lend as a major barrier to economic growth. The Parliamentary Commission on Banking Standards is also expected to call for RBS and other major banks to increase their small business lending when it publishes its long-awaited report on the future of the industry next week. Speaking in the Commons, the Commission's Tory chairman Andrew Tyrie said: "They need an RBS that is fully functioning for the first time in many years." Mr Javid said Mr Osborne had not been "directly involved" in meeting Mr Hester to discuss his removal. But Mr Hester did not deny speculation the two men did not get on, revealing they had not spoken for three months. Lord Myners, the former City minister, told the BBC Mr Osborne had made Mr Hester's position "close to impossible" and that the board - dominated by UKFI, which manages the Government's shareholding - was "doing the bidding" of the Chancellor. Mr Hester, who will leave at the end of this year with a pay-off worth up to £5.6million, was widely praised for bringing RBS back from the brink of collapse. RBS yesterday confirmed it was shedding 2,000 jobs from its investment banking arm.