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February 10, 2009

Ex-RBS and HBOS bank heads apologise to MPs

by Gill Montia

Story link: Ex-RBS and HBOS bank heads apologise to MPs

The former heads of Royal Bank of Scotland (RBS) and HBOS have today appeared before the Treasury Select Committee, which is investigating the causes of the UK banking crisis.

One time RBS chief executive, Sir Fred Goodwin, assured MPs that he “could not be more sorry” for the events that brought about the near collapse of his bank, while the group’s former chairman, Sir Tom McKillop, confessed that RBS’s acquisition of Dutch bank ABN Amro had been a “big mistake”.

The acquisition was made in late 2007 at a price considered high by many analysts, leaving RBS’s balance sheet exposed on the eve of the credit crisis.

The ex-bosses of HBOS also admitted mistakes with former chairman, Lord Stevenson, owning up that the bank had failed to foresee the credit crisis and the collapse of the wholesale markets, upon which the lender was highly reliant for its mortgage business.

Former chief executive, Andy Hornby, confirmed that HBOS was over-exposed to wholesale funding.

When questioned about the connection between the banking crisis and the bonus culture, the former chiefs admitted that bonuses had played their part in the crisis, by rewarding high risk taking.

 

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