It’s become a favoured mantra of the banking industry: “We’re really sorry about these legacy issues. But the chaps in charge are changing all that. They’re doing things differently now. Creating good safe banks we can be proud of.”
These claims are wearing very thin. Traders were still merrily trying to fix foreign exchange benchmarks even as their employers were being fined for other traders’ attempts to fix Libor interest rates. Only in March 2012 did Lloyds bring down the curtain on a toxic sales culture that prompted one life assurance salesman to mis-sell policies he couldn’t afford to himself and his own family. Chief executive Antonio Horta-Osorio had been on the job for a year before he took action on that one.
Now we have Royal Bank of Scotland (again), and the flurry of correspondence between it and the Treasury Select Committee released at the weekend concerning the disgraceful performance of deputy chief executive Chris Sullivan on the subject of RBS’s global restructuring group (GRG).
You may remember that the GRG shot to prominence after the former government adviser Lawrence Tomlinson accused it of forcing viable businesses to the wall in order to sell off their assets.
Sullivan, and the man who for years ran the GRG, Derek Sach, denied to the committee that it was run as a profit centre. Even though it was. As RBS subsequently admitted. Sach has since gone, and Sullivan is going.
We don’t yet know what the Financial Conduct Authority will decide to do about the GRG when it receives its skilled person’s review into its activities. But if it does find grounds to impose a penalty you can bet the provision for it will appear in a future set of RBS results as yet another legacy issue. As will the provisions for any civil settlements (if it gets that far).
There’ll be more apologies, more promises to change, more pledges to turn RBS into what it clearly isn’t: a good safe bank. The analysts will tweak their figures a bit to take account of the provision, and that’ll be that.
It speaks volumes that RBS’s shares were up (a bit) yesterday. The City saw what everyone else saw when the Treasury committee did its document dump over the weekend. And the institutional investors which control RBS’s share price shrugged their shoulders. Plus ça change, was their reaction. Move along. Nothing (much) to see here.
Sir Philip Hampton, the bank’s chairman, said he was very sorry for what he described as “a lack of clarity” in some of the evidence given by his subordinates.
But, really, there are only so many times you can apologise for events like this.
Many of RBS’s problems – like the IT disaster for which the bank was heavily fined last week – can still be traced back to the misrule of Fred Goodwin. But not this latest snafu. Ditto several other recent scandals that have engulfed RBS and other banks.
The new leadership the industry has promised is failing. Its culture is little changed. The question we need to answer is: Why? Is it because banking leaders are merely paying lip service to the need to clean house? Or is it because they can’t? If it’s the former, then regulators need to start using their powers to hold individuals to account, and quickly. If it’s the latter, and if it’s because these institutions are too big too manage, then we need to start discussing break-ups again.Reuse content