The inquisition is renewed as more bankers face MPs' ire

Published on 11/02/2009 20:32

THE day after the failed bankers, it was the day for Britain's MPs to consider the last bankers standing.

The Treasury committee, led as usual by its redoubtable chairman, John McFall, gave the requisite grilling on everything from bonuses to taxpayer bailouts to the five before them.

But chief executives Stephen Hester of Royal Bank of Scotland, Eric Daniels of Lloyds Banking Group, John Varley of Barclays, Antonio Horta-Osorio of Abbey, and HSBC's UK managing director Paul Thurston undoubtedly had an easier time of it than their counterparts 24 hours earlier.

Sir Fred Goodwin and Sir Tom McKillop, formerly of RBS, and Andy Hornby and Lord Stevenson, formerly of HBOS, had worn metaphorical sackcloth and ashes.

Yesterday's participants, who had not brought any bank to their knees, just wore polite expressions instead.

MPs didn't pull their punches, though. Nick Ainger MP told Hester et al on the subject of staff bonuses: "I distinctly get the feeling you don't appreciate the gold rush is over."

George Mudie MP also provoked crossfire on lending to mortgage owners and small businesses with the RBS boss.

Mudie said RBS and Lloyds had "screwed the government" in lending commitments in those sectors as a condition of the taxpayer bailout. Hester fired back: "That's an outrageous thing to say and untrue." Mudie was unrepentant, saying afterwards that there should have been more detail provided by RBS and Lloyds on the subject.

RBS's lending at the end of 2008 was up 10 per cent on its 2007 levels, Hester had told the committee. Daniels said Lloyds's lending to individuals at the end of 2008 was up 20 per cent on a year previous and up 10 per cent on lending to individuals.

Hester surprised some at the committee by saying RBS would look to include some of its foreign assets in any UK government guarantee scheme.

"Given how international we are, the assets we would put forward for the scheme would be from many countries," he said.

Hester said it was in UK taxpayers interests that RBS did this to remain strong, and that the only part of the business that the group was expanding was in this country.

Meanwhile, Hester said he empathised with public anger over taxpayer-funded bailouts and lavish bonuses for bankers. "I do think banking pay in some areas of the industry is way to high and needs to come down," he told the committee.

There was some humour, distinctly different from the po-faced exchange with the failed bankers the previous day.

One MP joked American Eric Daniels had given him such a cool stare reminiscent of a Mafia hit-man that he had thought twice about asking questions.

Daniels replied to much laughter: "I don't know whether that's a promotion. The last time you compared me with Bill Clinton."

But most the exchanges were not so good humoured. McFall accused Spanish bank Santander, owner of Britain's Abbey, of having an "utterly duff" due diligence process after its customers ended up with a 2.3 billion exposure to an alleged fraud by US financier Bernard Madoff.

At the end of the proceedings, McFall, who, as usual, became exasperated if he thought bankers were waffling, even the non-failed ones, said those ahead of him were virtually the last banks standing in the UK.

He said the committee wished them success because they were necessary for a healthy UK economy.

From non-executive non-performance to risk/control systems, the bankers had been grilled. But they knew they had had a far easier ride than their counterparts 24 hours earlier.