RBS bank chief Stephen Hester to forgo bonus

 

RBS chief executive Stephen Hester has announced that he will forgo his bonus this year because of the problems caused to thousands of customers by a failure in the company's computers.

The IT glitch delayed payments to NatWest, Royal Bank of Scotland and Ulster Bank accounts, leaving some customers short of cash and even forcing one man to spend a weekend in prison when his bail money was not available.

Mr Hester said today that the problems were caused by issues dating back to before he arrived at RBS in 2008, but taking a bonus would be "inappropriate".

He told the BBC: "I think it is inappropriate for me to have a bonus this year. We have let our customers down.

"That may have arisen from old systems and things that were from before my time, but I think we could reasonably have been expected to have improved things since then and clearly we didn't improve them enough.

"So it wouldn't cross my mind to have a bonus this year."

A spokeswoman for RBS Group said there was no figure for the bonus Mr Hester would have received, as it was more a case of him not being considered for one.

The meltdown, which began on Tuesday last week, meant that debits and credits have not been showing up in customers' accounts, leaving people with disappearing wages, disrupted holidays and difficulties with house moves.

RBS Group has extended its opening hours to cope with the chaos and even took the step of opening on a Sunday this week for the first time.

The banking group has promised that no one will be left out of pocket over the problems and has urged people to keep a record of how they were affected.

Fears have been raised that some people may unknowingly end up with blots on their credit scores, but the group has said it is working with agencies to make sure this does not happen.

Bank of England Governor Sir Mervyn King said earlier today that Britain's banks need a "real change in culture" following a series of high-profile scandals.

The Financial Services Authority (FSA) has revealed that RBS and other lenders have agreed to pay compensation to customers who were mis-sold complex financial products, called interest rate swaps.

Barclays has already been fined £290 million by UK and US regulators for manipulating the rate at which banks lend to each other.

RBS is among several lenders being investigated by the City watchdog over trying to influence the Libor - London interbank offered rate - and Euribor interbank lending rates to boost profits.

Mr Hester has previously been forced to waive his £963,000 all-shares bonus amid public outrage over bankers' pay.

RBS paid £785 million in bonuses last year, including £390 million for its 17,000 investment bankers. While the total pot is 43% lower than the previous year, it followed a period in which the bank announced thousands of job cuts.

Treasury Select Committee chairman Andrew Tyrie has written to Mr Hester demanding detailed information about the computer problems.

Mr Tyrie said earlier this week: "It is clearly unacceptable that so many people have suffered, and continue to do so, as a result of what looks to have been a major IT failure."

Mr Tyrie said it was also important to know what action the regulators have been taking to ensure proper oversight of the banks' computer systems.

Speculation has mounted over the cause, with unconfirmed reports suggesting that an inexperienced technician in India was behind the meltdown.

The problems reportedly began after a swathe of information was erased during a routine software upgrade for the banks, affecting the back-up systems as well as the live computer.

RBS Group have not confirmed whether or not the problems began in India but simply said staff in Edinburgh are working to put the issues right.

PA

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