MPs demand apologies from fallen bank bosses
Quartet face grilling by Treasury Select Committee over their part in credit crunch.
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Sir Fred Goodwin
Joined RBS in 1998, becoming its CEO two years later. Earned the nickname 'Fred the Shred' for his wont for cost-cutting and staffing lay-offs. Also led the company into a series of major purchases including Dutch bank ABN Amro and a stake in Bank of China. Awarded Businessman of the Year by Forbes magazine in 2002 for his work in developing RBS into a global player. Was the FTSE 100's longest-serving CEO before standing down in Ocotber. Knighted in 2004 for his services to banking. Sir Fred was paid a £2.9m cash bonus in 2007, partly reflecting the "successful" acquisition of ABN Amro which eventually crippled RBS
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The four men who presided over the spectacular rise and ignominious collapse of two of Britain's biggest banks will this morning face demands to apologise to the nation for their part in triggering the credit crunch.
The quartet – until recently senior executives at the Royal Bank of Scotland (RBS) and HBOS, which were bailed out with £37bn of public money – will step into the packed confines of the Thatcher Room at Portcullis House to face the Treasury Select Committee. MPs investigating the roots of the banking crisis will confront the bankers over their levels of pay and how they justify the bonuses they received.
Much of today's attention will focus on Sir Fred "the shred" Goodwin, the former chief executive of RBS and architect of the bank's ruinous takeover of the Dutch bank ABN Amro. He will be joined by Sir Tom McKillop, the former RBS chairman, Andy Hornby, the former chief executive of HBOS, and Lord Stevenson of Coddenham, its former chairman.
Nick Ainger, a Labour committee member, said: "It would be nice if they made an opening statement saying they were sorry for past mistakes. If that is not forthcoming, the question of an apology will be raised."
An apology would help rebuild the battered reputation of the City, the Liberal Democrat MP Colin Breed said: "Of course they should apologise. They should hang their heads in shame that, as experienced people, they failed in their roles. They should acknowledge that. Someone on the committee will ask them to offer an apology to a great number of people including the workers of businesses that have gone bust and even their own staff, who are now being vilified."
Mark Todd, the Labour MP for South Derbyshire, said: "Apologies are owed to the taxpayer at large, who has borne a substantial cost and risk of further loss through the rescue of these banks. There will be a strong temptation on the part of some members to give them both barrels."
Michael Fallon, the Conservative MP for Sevenoaks, said of Sir Fred: "If he isn't contrite, he will be making a mistake." But Mr Fallon warned that the committee must not succumb to the temptation of using the session wholly to attack the four men, for fear it could turn into a kangaroo court: "It is an opportunity to find out what went wrong, not throw tomatoes." Some committee members will meet its chairman, John McFall, beforehand to urge him to keep a firm control of the questioning.
The financiers are veterans of board room spats and AGMs but will be anticipating an encounter unlike any they have experienced before.
Mr Hornby and Lord Stevenson have been receiving coaching from their former employers to prevent further damage to the once-mighty high street brand. Sir Fred and Sir Tom have met the RBS lawyers.
Sir Fred has already enlisted the services of the former News of the World and Hello! editor Phil Hall to help cope with media interest. Mr Hall is a firefighter renowned for handling "hot" clients – his roster includes the former Met assistant commissioner Tarique Ghaffur and football businessman Kia Joorabchian, and has in the past catered for Heather Mills – and does not come cheap. He was brought in after journalists began visiting Sir Fred's family home.
"He is obviously going to face a lot of searching questions and I would expect he would be very direct in his responses," said Mr Hall at the weekend, insisting: "I don't know whether he will make an apology or whether his position is that what happened is a shared responsibility."
The former HBOS chairman Lord Stevenson can rely on help closer to home: the crossbench peer has considerable parliamentary experience as well as a 4 per cent stake in Lexington Communications, one of the UK's leading lobbying companies. Its services include "full rehearsals for any hearings that a client is summoned to", and "aiding preparation and confidence for the real event ... if the inquiry is expected to be controversial or particularly technical."
Political consultants at City PR firms help groom executives for the ordeal of MPs scenting blood. One senior consultant explained the training yesterday: clients are taken through lists of expected questions in high-pressure, mock-up scenarios or sat down to watch recordings of previous showdowns illustrating both good and bad responses.
"No one likes being called before a select committee because people say stupid things and it is embarrassing," he said, adding: "One or two of the committee like the sound of their own voices, including the chairman, John McFall. He will probably express mock indignation about bonuses, salaries or the ABN Amro acquisition. He is quite blunt and it is easy for people to appear to get wound up. The number one priority is not to embarrass yourself and the way to do that is to bore the committee to death while not appearing obstructionist. You should take as long as you can and go into as much detail as possible."
In the line of fire Bankers who fell to earth
Andy Hornby, 41, former HBOS chief executive
Background: Just 38 when he took over in 2006 from Sir James Crosby. The high-flying Harvard MBA cut his teeth at supermarket Asda before joining Halifax in 1999. Once paid £2m bonus to stop him defecting to Boots.
Lifestyle: Lives in North Yorkshire with his wife, who he met at Oxford, and his young family. Remains keen Bristol City fan.
What he did when it all went wrong: Fought spirited battle against "malicious" market rumours last summer, but was eventually forced to resign after Government-brokered takeover by Lloyds TSB. Disappointed not to get seat on board but prompted shareholder fury after it emerged he would stay on as a consultant at the new group on a salary of £60,000 a month. Agreed to waive £1.6m pay off when he went.
Earnings: Annual salary of £940,000 plus £700,000 bonus. Estimated total earnings as CEO: £3.5m
Taxpayer bailout: £10.5bn
Lord Stevenson of Coddenham, 63, former HBOS chairman
Background: Son of an Edinburgh Sheriff who went on to become one of the most influential men in Britain. Set up SRU management consultancy with style guru Peter York in 1973, was director of London Docklands Development Corporation. Became chairman of Pearson media group in 1997 and HBOS chairman following merger between Halifax and Bank of Scotland in 2001.
Lifestyle: Media-shy grandee, he is a close friend of Lord Mandelson and sits as a crossbencher in the Lords after being created life peer in 1999. Married with four sons. He has homes in London, Edinburgh and Suffolk.
What he did when it all went wrong: He kept a very low profile during the HBOS collapse. Faced down calls to resign immediately, eventually quitting last month when Lloyds takeover was complete.
Earnings: Took home £821,000 in 2007
Tax payer bailout: £10.5bn
Sir Fred Goodwin, 49, former RBS CEO
Background: Former Paisley grammar school boy trained as an accountant and becoming Gordon Brown's favourite financier serving on Government task forces and heading the Prince's Trust in Scotland. Feared as much as he was respected, he turned humble RBS into a global banking giant buying up 23 rivals, ruthlessly shredding costs and staff numbers. Venture into sub-prime toxic debt market and £47bn purchase of ABN Amro proved disastrous. Knighted 2005.
Lifestyle: Fiercely private family man, he split his life between a suite at the Savoy and the £350m RBS HQ in Edinburgh. Hobbies, Formula One, golf and rugby.
What he did when it all went wrong: Ousted in October when RBS was part-nationalised. Refused to take blame but declined £1.2m payoff. Finally apologised in November.
Salary: Joined RBS in 1998 as CEO, and salary was £4.2m in 2007. Also got £2.8m bonus plus 695,188 shares.
Taxpayer bailout: £20bn
Sir Tom McKillop, 65, former RBS chairman
Background: Scots-born PhD chemist went on to carry out industrial research – joining ICI on the advice of a man he met in a pub – before rising to become chief executive of drugs giant AstraZeneca. Retired from pharmaceuticals in 2006 and assumed chairmanship of RBS.
Lifestyle: Earned £2.25m in his final year at AstraZeneca, leaving with a pension pot of £12.6m. In 2004 he agreed to halve his salary at the drug company amid mounting shareholder concern over the failure to develop new medicines.
What he did when it all went wrong: Announced his deferred decision to stand down following Government bailout last October but finally fell on his sword this month saying he was "profoundly sorry" for the state of the bank.
Salary: Only joined RBS in 2006. His remuneration rose to a relatively humble £750,000 in 2007. Total earned at RBS less than £2m
Taxpayer bail out: £20bn
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Comments
PM Brown will not admit he is also responsible for this crisis. His fingerprints, as Chancellor for 10 years, are all over the crime scene. He removed the regulatory powers from the Bank of England to monitor and control banks' use of collateralised loan obligations involving sub-prime markets and from operating questionable securitisation instruments. He cannot remain in denial and must admit responsibility. He set up an ineffectual FSA to replace good B of E governance. They were inexperienced and lacked teeth. He was the meddling Chancellor who accepted plaudits for ending 'the cycle of boom and bust', he was the Chancellor who interfered. His incompetence is now being exposed.
Brown effectively removed a wheel from this financial vehicle and expected it to perform better and faster until it crashed. Now he doesn't want to accept the results from the accident investigator who has proved the removal of the wheel was the definitive cause of the crash. He must face up to reality because the British people no longer trust his judgement and his continued denial makes things worse.
Putting these bankers into the 'stocks' today will not absolve their greed nor the Prime Ministers reputation. Confidence will only return to our country with a General Election.
http://www.independent.co.uk/news/busin
FSA's 'It wasn't me guv, it was him' claim, is blocked
It seems you have a hangup regarding religous matters?? Please do not go into overload and start blowing fuses over this unfortunate matter, it is afterall only comment and if the simple circuitry of your mind is offended by them, I apologise!!!!!!
I'm really sorry, Chummy, but crumpets are not on for tea, God is not an Englishman, and if I were a "have" (an intelligent "have") I'd feel a bit nervy right now.
D'you know what I mean?
God save us, we need leaders - morally ethical leaders.
It is equally their fault!
They spent the governments budget knowingly, in the knowledge that it was a boom which therefore means they knew that a recession was foreboding! They merely blamed it on the banks to save their own skins but instead installed fear into people making this situation much more severe.
Mark from buy to let mortgage