Former bank chiefs apologise to Treasury Select Committee
The ex-bosses of Royal Bank of Scotland (RBS) and HBOS have apologised “profoundly and unreservedly” for the near-collapse of their banks.
Speaking to the Treasury Select Committee, Sir Fred Goodwin, former chief executive of RBS said he “could not be more sorry” for the events that led to the bank’s demise.
Furthermore, ex-chairman of RBS, Sir Tom McKillop, confessed that the purchase of Dutch bank, ABN Amro, was a “big mistake”.
RBS has had heavy exposure to the US sub-prime mortgage market and analysts have been vocal in their opinion that RBS paid too much for the Dutch bank.
Meanwhile, Goodwin and McKillop said the bonus culture needs to be reviewed, since it played a part in the credit crisis. RBS has been subject to heavy criticism for receiving huge bonuses, particularly as it was bailed out by the taxpayer.
However, an official review into how banks are managed and how pay affects risk-taking is to take place, according to Chancellor Alistair Darling.
In addition, Andy Hornby, former chief executive of HBOS, echoed the comments of the former RBS chiefs and said the bonus culture needs ‘to be looked at’.
However, Mr Hornby said he had not received a bonus last year but said he had taken previous bonuses in the form of shares.
Lord Stevenson, ex-chairman of HBOS, admitted to failing to predict the credit crunch and both former chiefs of HBOS have apologised.
Finally, it has just emerged that RBS is to cut over 2,000 UK jobs – just hours after its apology.
According to The Times, RBS is planning 2,300 job losses in back-office functions and represent approximately 2% of its workforce. The Times reported that the losses will not affect customer-facing branch staff.
RBS is soon to be 68% owned by the Government.