Senior bankers sorry for crisis

At a highly-anticipated encounter with the Treasury Select Committee, the former chiefs admitted they had misjudged the extent of the financial turmoil that engulfed both banks.

Both RBS and HBOS were brought to their knees by the credit crunch and were bailed out in the £37 billion taxpayer-funded rescue. HBOS was bought by rival Lloyds TSB and the new entity - Lloyds Banking Group - is 43% owned by the taxpayer.

Andy Hornby, former chief executive of HBOS, and Lord Stevenson, the ex-chairman, came under heavy fire for the sacking of Paul Moore, its head of group regulatory risk, in 2005 after he allegedly warned the company it was "going too fast".

Sir Fred Goodwin, former chief executive of RBS, which is now 68% owned by taxpayers, apologised for "all of the distress that has been caused". Sir Fred and former RBS chairman Sir Tom McKillop faced accusations of "destroying a great British bank and costing the taxpayer £20 billion" thanks largely to their decision to buy Dutch rival ABN Amro in 2007 at the peak of the market.

The pair admitted the £50 billion RBS-led takeover was "a bad mistake" and was now virtually worthless after the bank market collapse.

All four men vigorously defended their actions despite the apologies. Mr Hornby said that while he was "extremely sorry for the turn of events" that led to HBOS's rescue takeover by Lloyds TSB and Government bail out, he was "not personally culpable" for the crisis.

Sir Fred said it was "just too simple" to blame it all on him. He denied RBS had ignored warnings from the Bank of England and the Financial Services Authority (FSA), insisting that nobody had anticipated the scale of the crisis.

Committee members grilled the bank bosses over a failure to spot - or that they even ignored - the risks of trading in toxic assets and relying heavily on wholesale money markets. RBS is expected to have racked up losses of as much as £28 billion in 2008, which will mark the biggest ever loss in UK corporate history.

Sir Fred said he did not receive a bonus last year and that he put every previous bonus into shares in the bank, losing £5 million as a result. But his final salary pension pot is safe, while many people with pensions invested in shares of banks have seen their retirement funds devastated, MPs said.