‘RBS behaved badly but I can pull it through’

This is his mantra. He doesn't do grandeur. He's not pompous and aloof, and as such he just might be in the vanguard of a new type of bank chairman, someone who can restore respect to a company and an industry that have plummeted in public estimation.

What's he like, I asked someone who works with him at Sainsbury's, where he's chairman. "He's completely unflappable. He never raises his voice. He loves to debate issues and problems."

So it was yesterday. On the day when RBS was reeling from a 67% fall in its share price, the new boss wasn't ruffled.

It was not meant to be him. Mervyn Davies was lined up as the next RBS chairman, then Gordon Brown decided he wanted the Standard Chartered chairman in his government as a trade minister. "I've been approached numerous times from numerous sources about doing this [the RBS chair] for almost a year now" said Hampton, laughing. "They asked me again because I think the headhunters had come to the end of their short shortlist."

He was happy where he was, at Sainsbury's and chairing UK Financial Investments, the body set up to hold the Government's bank shares. "I was working for UKFI and really enjoying it. There's a lot of really interesting work going on there, about the shape of the banking system going forward. Then the headhunters said they had an even shorter shortlist for RBS, which was me."

Now he finds himself in charge of a bank that answers to UKFI, that has the Government as a 70% shareholder. It's a bank that was worth £75 billion two years ago and is worth £5 billion today — that after an injection from taxpayers and shareholders of £32 billion less than three months ago.

Nevertheless, he claims to be able to turn it round. "RBS is the same as any big, troubled business. Provided they've got decent assets, a well-regarded brand and a sensible management team they will always come through the other side. At the heart of this organisation is a good, profitable business. Provided the funds and the management are right, it will get through."

Tall and pencil-thin, Hampton wears wire spectacles which give him a studious air. He read English at Oxford and trained as an accountant with Coopers & Lybrand. Unusually in those days, he took himself off to Insead to study for an MBA. Suitably armed, he joined Lazards, the merchant bank, working in mergers and acquisitions. "I became an investment banker when investment bankers still came from Eton, Oxford and the Brigade of Guards. There's a much broader spread now."

For nine years he worked on deals, including the creation of Louis Vuitton Moët Hennessey. Then he was approached by British Steel. "They said it was time I stopped farting around in the City and got myself a proper job. And I wanted to get dirt under my fingernails."

At 37, he was finance director of British Steel and by far the youngest director. He played a key part in the paring of the firm, an exercise that saw the shifting of tens of thousands of jobs. He had a run of solid industrial jobs, ones that also crossed into Whitehall — from British Steel he went to British Gas and from there to British Telecom, always as finance director. He didn't shirk from tough decisions. He broke up British Gas and reduced British Telecom's debts.

Hampton likes to speak his mind, "without fear of favour" as an adviser put it, and at his next job, finance director of Lloyds TSB, he fell foul of the chief executive, Eric Daniels. They disagreed over dividends, with Hampton saying the bank was maintaining them at too high a level, at the expense of funding growth.

He left. At Sainsbury's, he has proved the perfect foil to Justin King. "They get on very well," said a close observer of them both. "Justin is like Tigger, jumping up and down; Philip is dead calm."

Hampton was paid £395,000 a year and "no bonuses, no pension, no fee". He faced the threat of takeover and was forced to play the diplomat, maintaining relations with the Sainsbury family. He also had to encourage King but keep an eye on him. "Sainsbury's is in good shape," he says. "That's down to Justin. It's a really good, classic turnaround story. It's taken over five years but they've got there. The figures are good, the business is really humming."

Now he's got RBS to deal with. The City is speculating that he can't chair two such large organisations, one in London, the other in Scotland. He doesn't disagree. "At times, Sainsbury's took over everything in my life but it was only ever a part-time job," he says. "Long-term it's probable that I can't do both [RBS and Sainsbury], but I believe in the short-term I can."

He sees no necessity for the bank to be 100% government-owned, as some have called for. "I don't think it needs to be nationalised. There is still a 30% minority holding. Don't forget, too, the Government is very much an involuntary investor. It doesn't want to be doing this. It would like to get the stakes off its hands as soon as possible, which is what we were doing at UKFI. Nationalisation won't speed up a return to the private sector." He adds: "At the moment there's flexibility. The Government having a liquid investment is a better place to be than full nationalisation."

At RBS, he will work with Stephen Hester, the new CEO and successor to Sir Fred Goodwin. He foresees no problems. "Stephen [Hester] and I get on. We've known each other a long time. He's very smart, very able." The pair are English and there are rumblings in Edinburgh about the bank's capitulation to the Sassenach, a feeling exacerbated by the likelihood of large-scale local job losses. Hampton is unfazed. "RBS is a UK-based international bank that is headquartered in Scotland. I'm not sure of the Scottishness thing. I've talked to lots of people there and have never detected any anti-English feeling. My sense is it's very overplayed."

He finds himself in a leading role at a bank that is being pilloried, in an industry that is anathema to most people. "Of course there is revulsion at the scale of the losses and the behaviour of the banks generally. It's right that there is. I suppose I would except HSBC from that, but the others at different stages have behaved pretty badly."

They can expect more, he says. "I think the loathing of bankers has got a way to run." However, he cautions: "But at some point, we have to realise banks are an area of our society where it's imperative they are on a sound footing. They're also, let us not forget, one of the areas that Britain excels in. It's not to our competitive advantage to keep criticising them. At some point we must turn the page and move on — but we're not there yet." He must go. He has a meeting on RBS about to start.