RBS AGM: Bank ‘through the worst’, says chairman

RBS chairman Philip Hampton arrives at the bank's HQ in Goagrburn, on the outskirts of Edinburgh. Picture: TSPL
RBS chairman Philip Hampton arrives at the bank's HQ in Goagrburn, on the outskirts of Edinburgh. Picture: TSPL
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SIR Philip Hampton, the chairman of the Royal Bank of Scotland, refused to rule out whether the lender had any further “skeletons in the closet” as the board faced another grilling from shareholders at its annual general meeting yesterday.

In a sometimes-tempestuous event at the Gogarburn headquarters, Hampton half joked that the bank’s lawyers would “skin him alive” if he were to give assurances that there would be no more issues to emerge around Libor-rate fixing, mis-selling scandals, or claims that it was mistreating its customers.

But he insisted that “we think we are through the worst”, as he told the audience that the bank was now well capitalised and was on course to “substantially complete” its five year plan to fix the bank by the end of 2014. Chief executive Stephen Hester pledged in 2008 to restructure RBS, which was largely taken into public ownership under a £45 billion government bailout.

Hampton said that charges for payment protection insurance (PPI) mis-selling, Libor-fixing and mis-selling of complex interest rate hedges to small businesses were “disappointments” for the bank last year, adding that “conduct costs” had cost the bank £2.2bn.

Hampton said: “A lot of it [libor rate fixing] did happen in 2008, and certainly in the opening months of the new board and new management at RBS. Nevertheless that behaviour was completely unjustified and regrettable.”

The chairman admitted that there could be further job losses and confirmed previous comments from the bank that some branches could close. “We’ve got to have our branches where our customers are, not always where we have had them for decades,” Hampton said. “We have work to do over the coming years to get our business in the right shape to deliver these ambitions, and that could mean further impacts on employees.”

A number of shareholders complained that customer service was poor, and Hampton admitted that some customers had been let down by “fairly grotesque mis-selling”.

Questions also arose over RBS’s plans for the 312 branches which the bank has been forced to sell by the EU. Hampton said RBS was pressing ahead with a flotation of the business but held out the possibility of a trade buyer.

The chairman also confirmed that the bank had been considering flotation of its US-based business Citizens.

However, Hampton also counted the US business as part of RBS’s “core” operation which contributed strongly to the bank’s £6.3bn operating profit last year.

Questions were raised about executive pay levels after the bank revealed that it paid out £607m in staff bonuses despite making a £5.2bn loss in 2012.

Hampton said that RBS was “at the forefront among banks” of addressing the “sometimes inappropriate” levels of pay in the banking industry, adding that “very few of our top people had any pay increase at all last year”.

He said that RBS pay was at the “tough end” of the salary scale in the banking industry, adding that “in time a correction is taking place” in the levels of pay across in the banking sector as a whole.

The vote on the bank’s remuneration report received the support of 99.3 per cent of shareholders.

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Hampton says further closures, job cuts could be on the way