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Bank bosses: We're very sorry
Paul Waugh10.02.09
The bankers blamed for Britain's financial crisis said they were "profoundly sorry" today - but claimed that they had lost millions themselves.
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."
Reader views (33)
What they said is "All of us have lost a great deal of money... and we are very sorry for that." They are not sorry for the massive damage to the entire nation they have done. They are just sorry that they are (a tiny bit) poorer. It makes me so angry. Even when 'apologising' they can't avoid putting their own self interest first. And this is after they all had coaching on what to say. It beggars belief.
- N. O'Neill, London, UK
Yeah right, what ever...
- Brandon Thomas, Chelsea, London UK
What the bankers didn't explain yesterday was WHY they did it. Perhaps owning up to naked greed be a step too far?
- Terry, Bradford uk
During the Brown boom and bust there were failures at 3 levels: bank directors, the FSA and the government. Both the FSA and the banks have accepted that they made mistakes so when is our inept government also going to admit that spectacular incompetence has resulted in this mess?
- Keith Appleton, London
Lets not forget that whilst at RBS, (for about 10 years) Goodwin (lets not call him 'sir') earned between 500 and 800k a year with bonuses of 2 - 4 million a year. Whilst thousands/millions are thrown onto the scrap heap, he'll still be able to enjoy luxury holidays and homes, privately educate his children, and want for nothing. The arrogance of these people is astounding. I trust the British people will continue to despise them - its what they thorougly deserve. Hopefully, then they'll waste their money on all the PR consultants hoping to persuade us that they are 'victims' too.
- James, london
For honest workers, the negative knock-on is wicked. Some people have lost everything, so hearing that the greedy bankers who are no longer mega rich, is almost an insult. They should be made to return all bonus money paid to them over the last three years. This is minor punishment for greedy managers who knew, but still continued to milk a dying duck.
Obviously this will not happen because politician and influential friends were totally in collusion.
- Hilary Hohmeister, Heidelberg, Germany
Wow I feel so much better now that they've said sorry!?
- Andy, London
How dare they insult our intelligence.
- John Smith, London , England
I find it hard to believe all these "brilliant" bankers,and indeed,our current prime minister, claiming they could not have foreseen the gravity of this crisis. With the information available on the internet it has been glaringly obvious for at least 3 years that we were heading for a huge financial disaster on the back of credit for which there was no credible colateral. I knew this, and I'm sure there was much more information available to the bankers and our,then chancellor. I just find it unbelievable that even after the collapse of AIG they did not seem to know what was coming. Do they think we are all completely stupid?
- Slymonious, GB
The problem with the banksters is it's easy enough to say sorry, but not sorry enough to resign, and then get paid bonuses etc makes it all worthwhile for them.
However, they should actually be paid only minimum wage, and some would suggest they should be in prison. People have lost their jobs because of them, so they are sick to demand their bonuses; they're lucky they still have their well paid jobs.
- Ralph, GB
mere WORDS
- Steve Byrne, Christchutch, UK
As we seem to have gone back in time in terms of codes of ethics and practices - I suggest that the great unwashed and growing impoverished need some bread and circuses to distract us.
Dear Boris - lets go back to basics - how about stocks in Trafalgar Square and we can line up the bankers, fat cats, etc. I am sure we can find some rotting fruit to chuck.
My grasp of the english language is obviously poor - I thought "bonuses" meant something extra - not a given
- Jc, se1
I have just received a cheque for $145.00 from the "sale" of my shares in HBOS. When I got those shares, they were worth £2000. Maybe I should send the cheque to Andy Hornby or Sir Dennis - to ease their hardship.
- Rosie, Barbados
May I just point out a fact. Chelsea football club have just paid someone £7.5 million for 7 months work. Further more the manager resoundly failed in his task.
Perhaps the reward for failure is cultural. How many government officials and senior civil servants get paid off in style for failure. Try reading the press over the past 5 years and you'll find that the culture of 'Gold Plated Failure' started in Whitehall.
- Sandy, London
Yes, but when is New Labour going to apologise? The bankers were the conduit for fatal errors made at government level. Why should Gordon Brown and Tony Blair be able to walk away smelling of roses?
- Luke, London
What a joke! This is clearly a show put up to appease public opinion. Funny how no one dared ask them whether they will be handing back their bonuses. I guess sorry will do for the voters till the next bonus year.
- John, London, UK
Mike Newland I have no faith in the Conservative party either. They privatised our resources which means most of everything we once had is now owned by foreign countries and outsiders. What happened to all that money? We buy oil from the middle east which is volatile and other country's situations affect our supply: when we had all the North Sea oil and arranged to sell it (I think) to Germany where it is processed and we buy it back at a greater cost. They followed the Deutschemark (in the eighties was it?)leading to the last recession. What would they actually do to change any of the things that are utilising the country's wealth and lining other people's pockets. Tony Blair entered enthusiastically into war, will we ever know the extent of the costs of that and now has an enormous pension pot.
- Ann, Chelmsford UK
Yes, anyone can say 'sorry'. They should show they mean it by giving away the assets the accumulated at the banks to the less fortunate who are sufferring because of their greed amd incompetence.
As matter of fact the government should make them do this.
- Mc, London
For there to be any justice to be done out of this, it has to be the restorative type.
It's not enough to 'feel' sorry [if they genuinely do], and to say sorry. They have to do sorry.
So how about those who facilatated the catastrophe making do with their past very substantial earnings and working for free for as long as it takes to put things right, as well as returning their obviously undeserved bonuses.
By the way, why do I get pay, but the big boys have had to be paid 'compensation' when it's they who should be compensating us?
- Barrie, essex UK
Labour sat by and let this happen they are responsible. If they wanted to control the bankers they could have via the FSA regulations. Will the Labour Government also be apologising for the promises that they made and the job that they did so inadequately? Thought not.
- Jk, London
The bankers were only doing what Labour wanted. Creating an unsustainable boom which kept it in office. That's why regulation was relaxed.
As long as the boom lasted they were honoured for their services to the economy.
Everything is short-term to Labour. Will the Tories be any different?
- Mike Newland, London, England
The spectacle of bankers , who have brought the UK's financial system to its knees, shedding crocodile tears and attempting to justify themselves on the basis that they had suffered too, is unedifying.
What they should be required to do (and, should be made to stay with the Treasury Select Committe until they answer all questions satisfactorily) is to give a full, objective and factual account of what led to the collapse of their respective organisations.
It seems very likely that such an account would show that banks have been playing fast and loose with other people's money, in activities ranging from lending to people who cannot afford to repay their debts, to taking large positions in areas involving excessive risk.
Bonus schemes may have contributed to the current situation but the nature of banking itself - and the clearing banks in particular - needs to be scrutinised and changed.
Banking is, at its core, a business based on confidence which cannot be sustained if excessive risk is taken. This implies that it should not be capable of generating the super profits on which large bonuses have been based.
Banks should also be focusing on lending to businesses (of all sizes) which will create real wealth rather than re-distribute wealth in favour of a few through financial engineering and gambling on financial markets.
The bankers responsible for this mess should be consigned to history. What matters now is that key issues are understood and addressed
- Simon, london
Let's see how sorry they are: will they back up their words by handing back their bonuses and pensions?
- Neil M., london uk,
We have now heard from the Bankers, but when will we hear from Brown that His and Blair’s policy of driving interest rates so low was a major contributing fact as well.
Over several years we were told of the spiraling
personal debt people had and Brown sat back riding the wave of so called prosperity Britain was in.
Labour should shoulder the blame as much as the Banks but Brown is in denial of this, as He stupidly thinks He can ‘pull the wool’ over the eyes of all.
Not so Brown!
Many of us know that ease of borrowing sows the seeds of debt.
This will be remembered, polling day draws ever nearer.
Make hay while you can, as this many be the last that
Labour will be making for many, many years.
Not that any other party can do better, but dead wood
has to be removed, otherwise new growth cannot transpire.
- Peter. C., rainham. essex.
If you truly believe these people are responsible for the crash, you are deluding yourself. They played a bit part at he end of an unsustainable game of borrowing over 20 plus years. There are large and small bsuiness cycles, and this time they have coincided, just as 80+ years ago.
You are also witnessing the balance of global power shift from the "West" to the "East".
If you want to truly compete with the East, you have to trim the fat from our economies, cut social security to the bone to encourage engagement in the economy, reduce taxes, and remove vast swathes of rules and regulation from our everyday lives.
I regret, this country will not have the stomach for any of it because it will mean pain, and we have gone soft.
- Dave Davies, Basingstoke
I'm not quite sure - when they've still made hundreds of thousands of pounds in bonus payments - that they can suggest that they've lost out.
- John Entwistle, Hertford
What a greedy load of bankers.
- Steve, Gloucestershire
Ah yes, the so-called magic word! After causing the biggest crisis in recent history these overpaid men are "sorry". Does this make it alright then? The word "sorry" is much overused these days.
- John, London
'I'm profoundly sorry' there, how easy is that to say but totally insincere. These guys are not sorry at all that's the sad truth of it all. This goes for all the City boys and girls who claim to have earned every penny of their bonuses - shameless greed shown by the lot of them.
- Sharon, London
Wonder if such sentiments will cascade to the staff below the boss!
- Tony Islander, Herts
Profoundly sorry they say,now give us our money back.
- Martin, Sheffield
Sorry is not good enough! These people are not school children!
- Ken Joralemon, london, UK
Sorry on one hand paying themselves millions on the other.Loosing millions with their bank balance is a drop in the ocean. We your customers feal sorry for you.Never mind as time goes by and the media stop printing your greedy deals you can get at it again.
- G.Diamond, Romford Essex
