Bank bosses: We're very sorry

In a bruising session with the Treasury select committee, the former chiefs of Royal Bank of Scotland and HBOS expressed their regrets for "all of the distress that has been caused" by their disastrous decisions.

The ex-bank chiefs also claimed they had personally been hit hard in the pocket and could not have foreseen the collapse in credit markets.

Andy Hornby, former chief executive of HBOS, said he "never received a penny" of his bonuses in cash during his tenure at the bank.

Sir Fred Goodwin claimed to have lost more than £5million in shares, having invested his bonus in stock.

Sir Fred - known in the industry as "Fred the Shred" - and former RBS chairman Sir Tom McKillop faced accusations of "destroying a great British bank and costing the taxpayer £20billion" thanks largely to their decision to buy Dutch rival ABN-Amro at the peak of the market.

They admitted that the £50billion RBS-led takeover in 2007 was "a bad mistake" and was now virtually worthless after the bank market collapse. The bosses presided over RBS and HBOS during the credit crunch that brought the banks to their knees and led to the industry's £37billion taxpayer-funded rescue. HBOS was bought by rival Lloyds TSB and the new entity, Lloyds Banking Group, is 43 per cent owned by the taxpayer.

The former bank chiefs also said that the bonus culture had contributed to the crisis and agreed that annual bonuses should instead be paid every three to five years.

The bankers were asked whether they had received any bonuses in 2008. Sir Fred Goodwin said that he took no bonus in 2008, but that his salary was £1.46million.

Mr Hornby said he had taken his bonuses in the form of shares. "I have lost considerably more money than I have been paid," he said, referring to falls in the value of those shares. Sir Fred added that he had lost about £5million on the value of his shares in 2007, although he stressed that he was not complaining.

Lord Stevenson, ex-HBOS chairman, added: "All of us have lost a great deal of money, including a great number of our colleagues, and we are very sorry."

After making his own apology, Mr Hornby infuriated the MPs by suggesting that he was not individually to blame. "I don't feel I am particularly personally culpable," he said. The bankers blamed their woes on the collapse of the wholesale lending markets, after the demise of Lehman Brothers sparked the credit crisis that engulfed RBS and HBOS.

Labour MP John Mann ridiculed them for claiming huge bonuses for their "brilliance" and then presiding over a disaster. At one stage, he asked Mr Hornby how much the Jobseekers' Allowance was worth. The ex-RBS chief replied: "I don't know the precise amount. I suspect it's a very low quantity of money."

Sir Fred denied RBS had ignored warnings from the Bank of England and the Financial Services Authority, insisting that nobody had anticipated the scale of the crisis.

Ministers are seeking to defuse public fury at City excesses with a cap on cash bonuses at banks rescued from collapse by the taxpayer. A limit below £25,000 is being discussed between the Treasury and such banks, including Royal Bank of Scotland.

In a separate move, a group of senior London bankers today warned they would sue if they are denied bonuses. The bankers are at managing director level, some with £1million bonuses.

There is cause for question on some judgments we've made'

Former HBoS chairman Lord Stevenson: "We are profoundly and unreservedly sorry at the turn of events. Our shareholders have lost a great deal of money, including a great number of our colleagues. I'd also say that we are sorry at the effect it's had on the communities we serve."

Former HBOS chief executive Andy Hornby: "I'm very sorry about what happened at HBOS. It has affected shareholders, many of whom are colleagues, it's affected the communities in which we live and serve, it's clearly affected taxpayers and we are extremely sorry for the turn of events that has brought it about. I have never received a single penny in cash bonus either in the two years I was CEO of HBOS or when I was on the board of HBOS."

Former RBS chief executive Sir Fred Goodwin: "[It is] hard to say that remuneration was a cause [of the bank's problems]. I would estimate that I have lost something in the region of £5 million in reduction in value of shares reflecting on everything that has happened, there is certainly cause for question on some of the judgments that we've made."

Michael Fallon MP, deputy chairman of the committee: "You've destroyed a great British bank and you have cost the taxpayer £20billion".

George Mudie MP: "You are all in denial aren't you?"

Lord Stevenson: "We are not in denial. We didn't spot scenarios coming up that have come up. Stress testing didn't stress test adequately."

Hornby: "I don't feel I am particularly personally culpable".

McFall: "Then, are you expressing sympathy because your PR advisers advise you to do so?"

Hornby: "No, no. I accept responsibility".

John Mann MP: "We keep reading about the requirement for brilliance. Are there people out there who are

more brilliant who could have done a better job than you at RBS?"

Sir Fred: "It would seem unreasonable of me to conclude that there weren't."

Mann: "You don't like criticism do you? You don't like it when people bring you the bad news do you? You lived for the good times but didn't want any criticism."

Sir Fred: "I cannot live in denial of the facts. But I don't accept your characterisation. I believe I have led the bank in a responsible fashion. I don't have a track record of ignoring problems."

Sir Tom McKillop, former RBS chairman: "The [ABN-Amro] deal was a bad mistake. We didn't fail, we did in fact make a bad mistake in purchasing ABN-Amro."