Comment: Setback for Hester as road to recovery gets bumpier STEPHEN Hester must feel like a child learning to ride a bicycle. Just when he's got a bit of momentum he suffers a wobble and falls off. His recovery plans for Royal Bank of Scotland were boosted last week by the flotation of Direct Line but have suffered setbacks from the scandals over payment protection insurance and Libor-rigging. Santander's decision, late on Friday, to pull out of a deal to buy 316 branches is another wobble for RBS's chief executive. The Spanish giant, which was already trying to revise the £1.65 billion price tag, had IT issues and said it could not meet the deadline to complete the deal. Hester's hopes of finding a new buyer ready to pay top dollar do not look encouraging since the bid process had produced few offers. Lord Levene's vehicle NBNK, which lost out to the Co-op in the battle for 632 Lloyds branches, may be fired up for another pitch at the RBS business, with possible interest from overseas such as Commerzbank. The Co-op, of course, had its own wobbles before reaching agreement with Lloyds, and the collapse of the RBS-Santander transaction has once again raised concerns that the Co-op deal could yet stumble. Merging businesses is never easy and even after spending more than £3bn, Lloyds is still integrating Bank of Scotland into the wider group. But there is usually some commercial logic in mergers around synergies, timing and price, even if these are not universally shared, as in the case of BAE Systems" ultimately thwarted tie-up with EADS. However, enforced mergers are an altogether different proposition. The European authorities may feel justified in demanding the break-up of the banks in exchange for the bail-out money they received, but it is an artificial process that breaches the normal supply and demand rules of the marketplace. Hester said he would not have sold the branches and certainly not at this time when he could not command best price. Barclays" swoop on ING Direct last week was one in the eye for those demanding more competition. RBS, as the victim in the Santander debacle, will surely request an extension to the sale deadline. Carving out these branches, almost entirely in England, to form what is effectively a small standalone bank has been a Trojan effort involving the separation of 1.8 customer accounts, relocation of staff and new internet channels. It will function normally for now, but the withdrawal of Santander has created huge uncertainty for 5,000 RBS employees and for their prospective new employer which has ambitions to grow in the UK and was planning a flotation on the London Stock Exchange. Real cash boost to the economy GOVERNMENT ministers may be under pressure to "do something" about boosting the economy, but it is not for the want of initiatives. Some have come and gone, including the short-lived National Loan Guarantee Scheme. Thankfully, some have moved from the drawing board into live projects and are disputing cynicism that anything that emerges from Whitehall is bound to be slow and bureaucratic. Stephen Welton, chief executive of the Business Growth Fund, wants to pump up to £300 million of equity investment each year into British business. Inspired by the UK government and backed by the big five banks, this is real cash helping to fuel the recovery, though he tells me it is the help offered by advisers on the boards that companies generally welcome.