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.

Start your day with The Independent, sign up for daily news emails
News
people
Arts and Entertainment
Attenborough with the primates
tvWhy BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Sport
The RBS Six Nations trophy at the Aviva Stadium ahead of Ireland vs England
rugby
News
Campbell: ‘Sometimes you have to be economical with the truth’
newsFormer spin doctor says MPs should study tactics of leading sports figures like José Mourinho
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
Arts and Entertainment
Kanye West found himself at the centre of a critical storm over the weekend after he apparently claimed to be “the next Mandela” during a radio interview
music
Sport
Wes Brown is sent-off
football
Voices
Lance Corporal Joshua Leakey VC
voicesBeware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
Life and Style
Alexander McQueen's AW 2009/10 collection during Paris Fashion Week
fashionMeet the collaborators who helped create the late designer’s notorious spectacles
News
i100
2015 General Election
May2015

Poll of Polls

Latest stories from i100
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

Recruitment Genius: Bookkeeper / Office Co-ordinator

£9 per hour: Recruitment Genius: This role is based within a small family run ...

Recruitment Genius: Designer - Print & Digital

£28000 - £32000 per annum: Recruitment Genius: This Design and marketing agenc...

Recruitment Genius: Quantity Surveyor

£46000 per annum: Recruitment Genius: This property investment firm are lookin...

Recruitment Genius: Telesales / Telemarketing Executive - OTE £30k / £35k plus

£18000 - £35000 per annum: Recruitment Genius: This company specialises provid...

Day In a Page

War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003
Barbara Woodward: Britain's first female ambassador to China intends to forge strong links with the growing economic superpower

Our woman in Beijing builds a new relationship

Britain's first female ambassador to China intends to forge strong links with growing economic power
Courage is rare. True humility is even rarer. But the only British soldier to be awarded the Victoria Cross in Afghanistan has both

Courage is rare. True humility is even rarer

Beware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
Alexander McQueen: The catwalk was a stage for the designer's astonishing and troubling vision

Alexander McQueen's astonishing vision

Ahead of a major retrospective, Alexander Fury talks to the collaborators who helped create the late designer's notorious spectacle
New BBC series savours half a century of food in Britain, from Vesta curries to nouvelle cuisine

Dinner through the decades

A new BBC series challenged Brandon Robshaw and his family to eat their way from the 1950s to the 1990s
Philippa Perry interview: The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course

Philippa Perry interview

The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course
Bill Granger recipes: Our chef recreates the exoticism of the Indonesian stir-fry

Bill Granger's Indonesian stir-fry recipes

Our chef was inspired by the south-east Asian cuisine he encountered as a teenager
Chelsea vs Tottenham: Harry Kane was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope

Harry Kane interview

The striker was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope
The Last Word: For the good of the game: why on earth don’t we leave Fifa?

Michael Calvin's Last Word

For the good of the game: why on earth don’t we leave Fifa?
HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?