Four former bank chiefs were accused of saying sorry only as a public relations move yesterday, after refusing to admit significant personal errors in the run-up to the near-collapse of RBS and HBOS. Sir Fred Goodwin and Sir Tom McKillop, who ran RBS, alongside Andy Hornby and Lord Stevenson of Coddenham, who ran HBOS, began their appearance before MPs with public apologies for their role in the crisis. However, as they fended off sustained and often blunt questions from all 14 MPs, it was not always clear what they had apologised for, or why they had made the errors to which they had owned up. Lord Stevenson told the Treasury Select Committee that he and Andy Hornby, the former chief executive, were “profoundly sorry” while Sir Tom McKillop, former chairman of RBS, said that he would “echo” the comments.
Sir Fred, previously chief executive of RBS, added: “I apologised in full and I’m happy to do so again.”
However, the four bankers refused to concede significant errors, saying the failure of the money markets was the root of their problems. MPs compared their statements later to the limited apology given by Tony Blair over the Iraq war.
Although Sir Tom conceded that the takeover of ABN Amro by RBS had been the wrong thing to do, he said that the problems had arisen because of the decline in the market rather than internal error.
“We are apologising for what is happening to our business, and the key factor is the collapse of the wholesale money markets,” Lord Stevenson said.
The plethora of apologies brought a sharp intervention from John McFall, the committee chairman, who asked: “What exactly are you apologising for? Are you expressing sympathy because your PR advisers tell you to?”
Throughout the three hour fifteen-minute session, the four denied that their individual decisions directly led to the near-collapse of the two banks, which caused them both to seek state bailouts in October.
At times the four looked uncomfortable, particularly when the questioning got personal, and they were asked whether they got carried away with their own publicity. Yet despite a dogged performance by most members of the committee there were no knockout blows.
Sir Fred and Sir Tom 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 takeover was “a bad mistake” and was now virtually worthless.
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 the government bail-out, he was “not personally culpable”.
Sir Fred said that it was “just too simple” to blame it all on him.
He denied that RBS had ignored warnings from the Bank of England and the Financial Services Authority (FSA), insisting that nobody had expected the scale of the crisis.
Committee members questioned the bank bosses over why they failed to spot – or even ignored – the risks of trading in toxic assets and relied heavily on wholesale money markets.
RBS is expected to have racked up losses of as much as £28 billion in 2008, which would be the biggest loss in British corporate history.
Sir Fred said that 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.
His final salary pension pot is safe, however, while many people with pensions invested in shares of banks have seen their retirement funds devastated, MPs said. The committee heard that Sir Fred earned £1.46 million last year and Mr Hornby was paid a salary of nearly £1 million.
The four found themselves having to admit that they possessed no formal banking qualifications between them but defended their suitability to lead banks. MPs said that it had been a central recommendation of theirs in light of the Northern Rock collapse that senior banking staff should hold a banking qualification, but the former titans of the banking sector were left struggling to say how many of their board directors held such qualifications.
One MP was met with silence when he asked: “This committee thinks that a banking qualification is important. Does any one of you think a banking qualification is important?”
After the hearing Mr McFall said: “They did give an apology and it seemed fulsome, but, as the session went on, I think they were drawing back from that and saying ‘Well, look, there were events outside our control’.
“If you ask me my opinion – yes, they were advised to do it [apologise]. Was there a hint of arrogance still there? Absolutely.”