HBOS and RBS chiefs say sorry for ignoring risks

The disgraced HBOS and RBS bosses got a kicking from MPs today - who also had some sensational whistleblower claims...

Last Updated: 31 Aug 2010

No question about today’s big event: Sir Fred Goodwin and Sir Tom McKillop, formerly of RBS, and Lord Stevenson and Andy Hornby, formerly of HBOS, were finally hauled in front of the attack dogs of the Treasury Select Committee for a very public dressing-down. The four men were quick to express their ‘profound’ apologies for the way things worked out, but it didn’t save them from criticism of their risk management, their lack of qualifications, and their all-round bad judgement. And the MPs even revealed that a former HBOS head of risk is claiming he was sacked after warning the bank against its rapid expansion…

Today’s hearing was the usual round of aggressive mud-slinging and pointless questioning that we’ve come to expect from the Committee – after all, many of the MPs are not financial experts, so it’s not easy for them to trip up bankers on technical details (some of them don’t even seem to fully understand how big banks work). However, they did strike a direct hit by revealing they’d had a submission from an HBOS whistleblower, who claimed to have warned the board about the excessive risks they were taking four years ago – and got sacked for his troubles. HBOS claims the FSA investigated and were perfectly happy, but we’re bound to hear a lot more about this episode…

One of the committee’s main obsessions was about the qualifications these men had to run big banks – or lack thereof. The MPs insisted on knowing how many of them (and their directors) were qualified as bankers. We’re sceptical about the idea that these banks only lost money because their top brass hadn’t done a BA in International Credit Crunch Reactions, but it’s a fair point to ask whether McKillop – a career pharmacist – was suitably equipped to chair an international bank...

In general, the four did a decent job of batting away questions about their salary and bonuses, insisting this was not to blame – although Hornby noticeably squirmed when the panel talked about his £60,000-a-month contract to advise Lloyds TSB (enough to pay for 36 staff jobs, said MP John Mann). The youthful HBOS chief certainly looked the most shell-shocked by the experience, although we can’t say we blame him…

The RBS duo also got plenty of stick about the ABN Amro deal – they pointed out that shareholders voted overwhelmingly in favour of it, but admitted that with the benefit of hindsight, it had been a bad deal. In fact this was really the general theme of the day – the four were never slow to apologise, but they largely suggested that they had only been proved wrong in retrospect, and there was nothing fundamentally wrong with their personal motives (which we can well believe), or their banks’ general set-up (which we don't believe at all, given what's happened)

So did we learn anything? Not a lot – but at least the bankers at the heart of this crisis got to face some kind of public reckoning for the damage their insitutions have done...

In today's bulletin:

HBOS and RBS chiefs say sorry for ignoring risks
JJB calls in the administrators after retail shoeing
Ed makes a Depressing Balls-up
Harriet Harman: No more sexism in the City
Editor's blog: Putting the world to rights in Portmerion

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