UK bankers ‘sorry’ for mistakes - Emirates24|7

UK bankers ‘sorry’ for mistakes

Fred Goodwin, the former RBS Chief Executive, who was ousted after the UK government took a 70 per cent stake in the bank. (REUTERS)

Four ousted British bankers apologised for mistakes that brought Royal Bank of Scotland and HBOS to the brink of collapse, saying the sector should tweak its maligned lavish pay system.

RBS's acquisition of ABN AMRO was "a bad mistake", former Chairman Tom McKillop told parliamentarians, saying he was sorry the deal -- the main source of its problems -- happened just before the credit crisis hurt banks across the world.

"You've destroyed a great British bank," one parliamentarian told Fred Goodwin, the chief executive of RBS who was ousted after the UK took a 70-percent stake in the bank.

The cross-party committee quizzed the four amidst fierce media criticism and a backlash against bankers and their lavish perks, after the UK government spent 37 billion pounds ($55 billion) to bail out the two banks.

Trade union members paraded outside the entrance of the building before the meeting started, carrying placards reading: "Remember us? You've put our jobs at risk."

"We are profoundly, and I think I would say unreservedly, sorry at the turn of events," Dennis Stevenson, the former chairman of HBOS told a hearing on Tuesday.

In the United States, President Barack Obama has capped executive pay for companies getting taxpayer funds amidst a global rethink of bonus systems that critics say fostered too much risk-taking and helped cause the credit crisis.

Crammed in a fairly small room where many visitors remained standing, the four bankers seemed well-prepared to answer questions from parliamentarians, and none looked flustered by the sometimes harsh questioning.

Bankers in the hearing suggested changes to their remuneration systems, including paying out part of their salaries in shares linked to the success of their banks and linking it to multi-year performance.

John McFall, the chairman of the Treasury committee who lead the questioning, said before the meeting banks were living in the past and must recognise huge bonuses are unacceptable.

"It is a different world and if they (banks) do not recognise that then they will become more alien for all of society," McFall told Sky News.

"I see banks as the life blood for the economy. They are the means by which the blood circulates around the economic body, so they've got to work and they've got to work well," he added.

British Prime Minister Gordon Brown on Monday pledged to end rewards for failure in a financial system crippled by the credit crisis, though he stopped short of halting bonus payments at part-nationalised banks.

Goodwin waived any pay-off when he left, but still received a 2.9 million pound payout in 2007, the year he led RBS's ill-fated acquisition of ABN AMRO.

Goodwin, a steely Scot who led RBS for nine years, is flanked by his former chairman Tom McKillop, who stepped down from RBS last week, three months before his planned departure.

McKillop has been widely criticised for not restraining Goodwin's appetite for deals.

Also facing the panel is Andy Hornby, who was chief executive of HBOS until it was taken over by Lloyds in a government-brokered rescue.

Dennis Stevenson, chairman of HBOS from 2001 until the Lloyds deal completed in January, was the fourth member to face the politicians.

RBS's new chief executive, his counterparts at Barclays and Lloyds and the UK heads of HSBC and Santander will be quizzed by the Treasury committee on Wednesday.

 

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