Humiliated bank bosses queue up to say sorry

Former chiefs of RBS and HBOS run the gauntlet of furious MPs. Role in crisis that cost British taxpayers billions of pounds is condemned

It was billed as the moment that arrogant bankers would finally be held to account for their roles in the failure of two of Britain's biggest banks. And when the former heads of the bailed-out banks RBS and HBOS appeared in front of MPs yesterday, they wasted no time in making an apology for the disastrous decisions that led to the near-collapse of the institutions.

But at the end of questioning by the Treasury Select Committee, the four former bosses still faced accusations of arrogance and denial over their roles in the plight of their former banks, which needed a £37bn bailout from the taxpayer to avoid collapse.

Before the session began, some MPs were wary of the proceedings turning into a kangaroo court. Sir Fred Goodwin and Sir Tom McKillop, formerly chief executive and chairman of RBS, and Andy Hornby and Lord Stevenson, who held the same positions at HBOS as it neared collapse, were soon fidgeting in their seats after being accused of "destroying" British banks, lacking credentials needed for their former jobs and costing taxpayers billions of pounds.

On blame

The meeting did not have to wait long to hear the expected apology from the four bankers, which came in reply to the first question from committee chairman, John McFall. The first apology came from Lord Stevenson,former chairman of HBOS, who said: "We are profoundly and, I think we would say, unreservedly sorry for the turn of events. We are sorry about the effects it has had on the communities we serve." Andy Hornby also made a broad apology to everyone affected by the sorry state of the bank.

But it was an apology from the former RBS chief executive, Sir Fred Goodwin, who many regard as the driver of the bank's over-stretching in the past, that committee members had most wanted to hear, and they got it.

"I apologised in full and I'm happy to do so again," he said, adding that it was a "profound and unqualified apology".

Sir Tom McKillop, who apologised to shareholders in November, apologised again "both personally and on behalf of the board".

On bonuses

Some of the bankers defended themselves against claims that they had received massive bonuses for their time at the helm of the two failed banks. Mr Hornby revealed that while he had not received a bonus for 2008, he had invested all his previous bonuses awarded to him as a board member and chief executive in shares – which have plunged in value during the credit crunch and recession.

"In the two years that I have been chief executive, I have lost simply more money in my shares than I have been paid," he added. But he admitted he was still receiving £60,000 a month from his former bank for acting as a consultant. He said he would work "for free" if the bank still needed his help after his three-month contract expired.

Mr Hornby conceded the bonus system in the banking industry had "proven to be wrong" as bankers were rewarded for the number of deals they completed in the short term, even though in many cases their decisions were disastrous for the banks and their customers. "That is not rewarding the right type of behaviour," he said, adding that bonuses should be tied to performance over a much longer period. The bankers maintained they had suffered financially. Lord Stevenson added: "All of us have lost a great deal of money."

Sir Fred, who has faced calls from Liberal Democrat leader Nick Clegg to return his last bonus, said he had also invested it in his bank's shares, but confirmed he had been paid a £1.46m salary last year. He also admitted his final salary pension would be unaffected by the bank's poor performance.

On ABN Amro

The former RBS bosses also conceded that the purchase of the Dutch bank ABN Amro was not only a "bad mistake", but that the £10bn the bank invested in the purchase was now all but gone. It was perhaps the most difficult moment for Sir Tom, admitted the deal now looked misguided. Sir Fred also conceded that the deal, carried out at a price which many commentators at the time described way over the odds, was "badly timed".

All four men conceded that despite leading two of Britain's most prestigious banks, they did not hold any formal banking qualifications. They had to make the embarrassing admission that they did not understand some of the complex financial instruments on the books of their respective banks that were in part responsible for causing their large losses.

When the Conservative MP Peter Viggers asked if they had understood the full complexities of the products devised by "clever young men", Sir Tom replied: "You said 'full complexities'. I would say no."

It was Sir Fred who most strongly pushed the case that no one in the banking sector predicted the size of the financial collapse on the horizon, including the Bank of England and the Financial Services Authority. "There was a definite mood that the economy in this country and generally was going to slow down, but at no point did anyone get the scale or the speed of this, and that was what was so damaging about this slowdown," he said.

On culpability

As the meeting broke up, MPs, journalists and members of the public remained unconvinced that the banking bosses fully accepted their culpability for the decisions that led to their banks having to turn to the taxpayer.

Andy Hornby conceded that he did not feel personally culpable for the near-collapse of HBOS, which led to its eventual takeover by Lloyds TSB.

After listening to the men, Labour MP George Mudie accused them of still being in "bloody denial" about their roles. The committee's chairman, Mr McFall, said afterwards: "They did give an apology and it seemed fulsome ( sic), but, as the session went on, I think they were drawing back from that and saying 'Well, look, there were events outside our control'. Was there a hint of arrogance still there? Absolutely."

A sorry affair: How the bankers fared

Andy Hornby Former chief executive of HBOS

How sorry? 2/5

Although he apologised to shareholders and communities hit by the crisis, his contrition was later put under question when he suggested he was not "personally culpable" for the collapse of the bank.

Stickiest moment? 5/5

Had to admit he was receiving £60,000 a month as a "consultant" to Lloyds, which took over his old employer, HBOS.

Fight factor? 3/5

Fought back over bonuses, saying he had invested all his past bonuses in shares, meaning he had lost a significant amount as a result.

Lord Stevenson Former chairman of HBOS

How sorry? 5/5

The most contrite of the four. He was the first to apologise and his apology was the fullest, telling MPs it was profound and unreserved.

Stickiest moment? 2/5

Forced to dispute the suggestion that he was still in denial about his role in the scale of the crisis to hit HBOS. Not too much difficulty.

Fight factor? 0/5

No stomach for a fight. He repeated to the committee that he took responsibility for his actions and was the least inclined to challenge the MPs.

Sir Fred Goodwin Former chief executive of RBS

How sorry? 3/5

Sir Fred said he would repeat an apology already made to shareholders. Not as wide-ranging as that of the HBOS bosses.

Stickiest moment? 4/5

Almost forced to admit personal culpability. Asked by Labour MP John Mann if he had a "different moral compass from other people", he said there was a "case for questioning" some decisions he made.

Fight factor? 5/5

The most tenacious of the four. At the end of the meeting, said blaming him would not help MPs understand how the banking crisis occurred.

Sir Tom McKillop Former chairman of RBS

How sorry? 3/5

He had already apologised to shareholders but repeated his apology for the committee, adding that he did so "personally and on behalf of the board".

Stickiest moment? 4/5

Admitting he did not completely comprehend some dealings under his stewardship. In response to the suggestion he did not fully understand some financial instruments, he replied: "I would say no."

Fight factor? 2/5

He was angered by the accusation that there was any question over his integrity but did not make a meal of it.

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Extras
indybest
Travel
Flocking round: Beyoncé, Madame Tussauds' latest waxwork, looking fierce in the park
travelIn a digital age when we have more access than ever to the stars, why are waxworks still pulling in crowds?
Arts and Entertainment
tv
Arts and Entertainment
Judi Dench appeared at the Hay Festival to perform excerpts from Shakespearean plays
tvJudi Dench and Hugh Bonneville join Benedict Cumberbatch in BBC Shakespeare adaptations
Sport
Is this how Mario Balotelli will cruise into Liverpool?
football
News
Ronahi Serhat, a PKK fighter, in the Qandil Mountains in Iraqi Kurdistan
i100
Arts and Entertainment
Poet’s corner: Philip Larkin at the venetian window of his home in 1958
booksOr caring, playful man who lived for others? A new book has the answer
Arts and Entertainment
Exhibition at the Centre Pompidou in Metz - 23 May 2012
art
News
Matthew McConaughey and his son Levi at the game between the Boston Red Sox and the Houston Astros at Fenway Park on August 17, 2014 in Boston, Massachusetts.
advertisingOscar-winner’s Lincoln deal is latest in a lucrative ad production line
Life and Style
Pick of the bunch: Sudi Pigott puts together roasted tomatoes with peppers, aubergines and Labneh cheese for a tomato-inspired vegetarian main dish
food + drink
Arts and Entertainment
Alfred Molina, left, and John Lithgow in a scene from 'Love Is Strange'
film
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Junior Quant Analyst - C++, Boost, Data Mining

£25000 - £35000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...

Service Desk Analyst- (Desktop Support, Help desk)

£25000 - £35000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...

Junior Quant Analyst (Machine Learning, SQL, Brokerage)

£30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst (Machine Lea...

UNIX Application Support Analyst- Support, UNIX, London

£45000 - £55000 per annum: Harrington Starr: UNIX Application Support Analyst-...

Day In a Page

Air strikes? Talk of God? Obama is following the jihadists’ script

Air strikes? Talk of God? Obama is following the jihadists’ script

The President came the nearest he has come yet to rivalling George W Bush’s gormless reaction to 9/11 , says Robert Fisk
Ebola outbreak: Billy Graham’s son declares righteous war on the virus

Billy Graham’s son declares righteous war on Ebola

A Christian charity’s efforts to save missionaries trapped in Africa by the crisis have been justifiably praised. But doubts remain about its evangelical motives
Jeremy Clarkson 'does not see a problem' with his racist language on Top Gear, says BBC

Not even Jeremy Clarkson is bigger than the BBC, says TV boss

Corporation’s head of television confirms ‘Top Gear’ host was warned about racist language
Nick Clegg the movie: Channel 4 to air Coalition drama showing Lib Dem leader's rise

Nick Clegg the movie

Channel 4 to air Coalition drama showing Lib Dem leader's rise
Philip Larkin: Misogynist, racist, miserable? Or caring, playful man who lived for others?

Philip Larkin: What will survive of him?

Larkin's reputation has taken a knocking. But a new book by James Booth argues that the poet was affectionate, witty, entertaining and kind, as hitherto unseen letters, sketches and 'selfies' reveal
Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?

Waxing lyrical

Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?
Texas forensic astronomer finally pinpoints the exact birth of impressionism

Revealed (to the minute)

The precise time when impressionism was born
From slow-roasted to sugar-cured: how to make the most of the British tomato season

Make the most of British tomatoes

The British crop is at its tastiest and most abundant. Sudi Pigott shares her favourite recipes
10 best men's skincare products

Face it: 10 best men's skincare products

Oscar Quine cleanses, tones and moisturises to find skin-savers blokes will be proud to display on the bathroom shelf
Malky Mackay allegations: Malky Mackay, Iain Moody and another grim day for English football

Mackay, Moody and another grim day for English football

The latest shocking claims do nothing to dispel the image that some in the game on these shores exist in a time warp, laments Sam Wallace
La Liga analysis: Will Barcelona's hopes go out of the window?

Will Barcelona's hopes go out of the window?

Pete Jenson starts his preview of the Spanish season, which begins on Saturday, by explaining how Fifa’s transfer ban will affect the Catalans
Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape