UK bankers grilled over mistakes
Leading financiers apologise to parliamentary committee over role in global credit crunch.
Last Modified: 10 Feb 2009 17:31 GMT
Unions want the government to ensure that no British jobs are outsourced abroad by the banks [AFP]

Four former leading British bankers have apologised for mistakes that brought Royal Bank of Scotland (RBS) and HBOS to the brink of collapse, admitting the sector should rethink its increasingly unpopular practice of paying lavish bonuses.

Questioned by UK parliamentarians, Tom McKillop, the former chairman of RBS, said the bank's acquisition of ABN AMRO in 2007 was "a bad mistake" and that he was sorry the deal happened just before the credit crisis hit banks across the world.

The cross-party treasury committee quizzed the four men amidst fierce media criticism and a growing backlash against bankers, their lavish perks, and the billions of pounds of taxpayers money spent bailing out the banking system.

"You've destroyed a great British bank," Michael Fallon, the opposition Conservative politician, told Fred Goodwin, the RBS chief executive, who was ousted after the government came to RBS's rescue by taking a 70 per cent stake in the bank.


Addressing Tuesday's hearing, Dennis Stevenson, the former chairman of HBOS, said: "We are profoundly, and I think I would say unreservedly, sorry at the turn of events."

Also facing the panel was Andy Hornby, who was chief executive of HBOS until it was taken over by Lloyds in a government-brokered rescue.

Brown said he would end the system of rewards for failure in the financial system [EPA]
Crammed into a small room where many onlookers remained standing, the four bankers showed growing signs of exasperation towards the end of more than three hours of sometimes harsh questioning in which they were repeatedly accused of trying to shirk full responsibility.

"It's just too simple if you want to blame it all on me," Goodwin said in the closing minutes.

"If you want to blame it all on me and close the book, that will get the job done very quickly, but it's not going anywhere near [finding a solution]."

The bankers, unflustered for most of the session, suggested changes to their remuneration systems, including paying bonuses in shares only and linking them to the success of their banks over a three to five year period.

John McFall, the chairman of the treasury committee who lead the questioning, said before the meeting banks were living in the past and must recognise huge bonuses are not acceptable.

Criticism that bonus systems fostered undue risk-taking and helped cause the credit crisis has triggered a global rethink of remuneration, with Barack Obama, the US president, capping executive pay for companies getting taxpayer funds.

Gordon Brown, the British prime minister, said on Monday that he would end rewards for failure in a financial system crippled by the credit crisis, though he stopped short of halting bonus payments at part-nationalised banks.

Union protest

Cath Speight, part of a small group of trade union protesters outside the houses of parliament, said: "[The bankers] are not going to be signing on for jobseekers' allowance any time soon.

"Our members are going to want to know how they pay their mortgage when they've lost their job through no fault of their own."

British-based banks have announced some 14,000 job cuts since the global financial crisis intensified last August and international banks with UK operations have announced tens of thousands more.

The union wants the government to ensure that no British jobs are outsourced abroad by the banks who have become part-nationalised in the fall-out from the crisis.

"If any of these newly-funded institutions come anywhere near government with plans to offshore jobs, we want the government to say 'absolutely no way'," said Speight.

On Wednesday, the committee will hear from a group of bankers still in position, questioning RBS's new chief executive, his counterparts at Barclays and Lloyds and the UK heads of HSBC and Spanish bank Santander.

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