11/02/2013 18:32:00

UPDATE: RBS Executives: Too Busy Fixing Bank to Spot Libor Warning Signs

Related content
Related debate
11 Jun - 
Royal Bank of Scotland ejes 80 % af den britisk stat og..

(Adds CEO comment throughout.)

By Max Colchester and Margot Patrick

LONDON--Top executives at Royal Bank of Scotland Group PLC (RBS) said Monday that they were too busy attempting to save the bank in the wake of the financial crisis to notice the activities of traders who were trying to rig inter-bank lending rates.

During a meeting with a U.K. parliamentary committee, Chief Executive Stephen Hester bemoaned "failings of control and process" for the bank not spotting that some traders were trying to rig rates.

He said his management team was focused on trying to right the bank following its bailout by U.K. taxpayers in 2008 and were too slow to react to evidence of wrongdoing. His chairman, Philip Hampton, assured that the bank had taken "brutal action" against those directly associated with the rigging.

RBS last week agreed to a GBP390 million settlement with U.S. and U.K. authorities, becoming the third financial firm after Barclays PLC (BCS) and UBS AG (UBS) to acknowledge that its employees sought to manipulate benchmark rates. RBS said 21 employees were directly involved, and had all either left the bank or been disciplined.

Outgoing head of investment banking John Hourican, who announced he would leave the bank following the settlement, explained to the commission that his departure is sign that he ultimately is taking responsibility for the issue. RBS last week announced his planned departure along with the settlement, although it stressed that Mr. Hourican had no direct involvement in the matter.

Mr. Hourican also said the bank was effectively undergoing a "cardiac arrest" in October 2008, when he took over as head of investment banking and Mr. Hester joined RBS to forge a recovery plan. The bank took a GBP45.5 billion bailout from the government in 2008 and 2009.

Mr. Hourican defended Mr. Hester's decision to stay on at the bank, saying that stakeholders would be better off if Hester remained.

Mr. Hampton backed him, saying that "mass series of assassinations" weren't needed at the bank following its Libor settlement and that only one senior manager needed to take responsibility. He added that RBS head of markets Peter Nielsen would face bonus clawback, but he re-iterated that Mr. Hester should be allowed to receive a GBP780,000 bonus deferred from 2010.

"Stephen is doing one of the most challenging jobs in world business," he said. "He is paid well below the market rate." Mr. Hester said that his bonus should reflect "all that I do well or badly."

RBS' former head of investment banking, Johnny Cameron, who left the bank in early 2009, said traders at banks involved in the attempted rate manipulation had more in common with each other than other bank workers, and that their behavior seemingly had little to do with the firms they worked for.

It is "as much about the culture of traders and people who trade things than any bank," Mr. Cameron said in testimony to a U.K. parliamentary commission studying ways to improve banks' ethical standards.

He said RBS' risk managers failed to recognize the potential for traders to influence submissions used to help set interest-rate benchmarks, and that the failure highlighted why traders need "tight and close management."

"I do think that traders have a particular approach to life and need much tighter controls. By and large, those controls are imposed. What happened in this case was that the risk managers didn't recognize this as a risk, and those controls were not there," Mr. Cameron said.

-Write to Margot Patrick at margot.patrick@dowjones.com

(END) Dow Jones Newswires

February 11, 2013 13:32 ET (18:32 GMT)

Copyright (c) 2013 Dow Jones & Company, Inc.

Post comment

Related debate

  • 1 week
  • 1 month
  • 1 Year
Ingen indlæg

Regulatory news

Form 8.3 - RSA Insurance Group

04/08/2015 10:45:13
FORM 8.3 PUBLIC OPENING POSITION DISCLOSURE/DEALING DISCLOSURE BY A PERSON WITH INTERESTS IN RELEVANT SECURITIES REPRESENTING 1% OR MORE ..

Form 8.5 (EPT/RI) - Bwin.Party Digital Entertainment plc

04/08/2015 07:32:59
FORM 8.5 (EPT/RI) PUBLIC DEALING DISCLOSURE BY AN EXEMPT PRINCIPAL TRADER WITH RECOGNISED INTERMEDIARY STATUS DEALING IN A CLIENT-SERVING CAPACITY..

Alliance Trust PLC : Net Asset Value(s)

03/08/2015 13:39:38
ALLIANCE TRUST PLC At the close of business on Friday 31 July 2015, the unaudited net asset value per ordinary share of 2.5p, valued on a bid price bas..

Most read news

  • 24 hours
  • 48 hours
  • 1 week
1
INGREDION COMPLETES ACQUISITION OF KERR CONCENTRATES, INC.
2
Endurance Reports Second Quarter 2015 Financial Results
3
Crédit Agricole SA is adjusting its organisation to oversee its transformations and enhance collective performance
4
JCPenney Announces Two Senior Executive Appointments to Propel its Omnichannel Growth Strategy
5
Multi-Color Corporation Announces Date of First Quarter FY 2016 Financial Results Conference Call and Webcast

Related stock quotes

Royal Bank of Scotland G.. 334.80 -0.8% Stock price decreasing
Barclays PLC 280.55 -2.7% Stock price decreasing
UBS N 22.10 -1.3% Stock price decreasing
Royal Bank of Scotland G.. 10.49 0.0% Stock price unchanged
Barclays PLC 17.92 0.0% Stock price unchanged
UBS Group AG Registered .. 23.12 0.0% Stock price unchanged

Buy and sell signals

  • Trend
  • Moneymachine

Copyright Euroinvestor A/S 2015   Disclaimer and Terms of Use
Quote information is delivered by Interactive Data.
Data is delayed 15-20 minutes according to the distribution agreements set by the different exchanges.
 
04 August 2015 12:41:58
(UTC) Dublin, Edinburgh, Lisbon, London
Version: LiveBranchBuild_20150803.2 - EUROWEB3 - 2015-08-04 13:41:58 - 2015-08-04 12:41:58 - 1000 - Website: OKAY