And now for your daily dose of banking scandal and comeuppance. The head of RBS’s investment banking operation, John Hourican, is expected to step down in the not-too-distant future, amid $625m worth of fines from regulators on both sides of the pond. There is no suggestion that Hourican was involved personally in the Libor rate-fixing malarkey, but he’s apparently on his way out nonetheless.
Just in case you need reminding what the Libor thingamabob actually is: it's the rate which governs wholesale (rather than retail) lending - the rate at which banks lend money to one another.. The scandal is that banks were colluding during the global financial crisis to manipulate these rates and put themselves in a more advantageous trading position. As a result, it is thought that the interest rates paid by customers with loans and mortgages could have been pushed up artificially, costing consumers millions of pounds more than they realistically should have paid.
The business secretary, Vince Cable, told BBC Radio 5 Live on Wednesday morning that he felt that RBS should pay the fines from cash reserved from staff bonuses, not from taxpayer bailout funds or deposits from its own customers. It is a complicated financial setup for RBS to pay a fine anyway, seeing as the government owns 81% of the shares. (Remember, it had to step in to bailout the bank at the height of the financial crash).
Cable said: ‘The problem is that these are global banks and if they’ve committed breaches of the law in the US they have to be punished accordingly. It is absolutely galling for UK taxpayers to be asked to stump up for it.’ RBS, on the other hand, was more opaque about the issue. ‘Although the settlements remain to be agreed,’ it said in statement, ‘RBS expects they will include the payment of significant penalties as well as certain other sanctions.’ So no indication of how the fines will be funded, then.
Interestingly, Cable told journalists this morning that the idea of selling back government shareholdings in both RBS and Lloyds to the private sector now looks like a ‘distant dream’, and is not on the table for consideration at the moment. But his proposals to distribute RBS shares for free to the public when the time comes have not yet died a death. He said: 'It could be mutualised, shares given to the public - the kind of thing my party, the Liberal Democrats, have been advocating. Those options are all open and we haven't foreclosed on any of them.'