Royal Bank of Scotland: Demonisation of Goodwin bad for Britain, claims Stephen Hester
Stephen Hester: Demonisation of Goodwin is bad for Britain. Picture: Sean Bell
ROYAL Bank of Scotland boss Stephen Hester has spoken about the removal of Fred Goodwin’s knighthood, warning that “personal vilification” does not “reflect well on the country”.
Mr Hester also admitted he had misjudged public outrage over his own £1 million bonus and said he had considered resigning.
The board had been “caught on the hop” by underestimating reaction to the payout, which he later waived.
Mr Hester acknowledged that bank bonuses were controversial but said RBS had not realised what a storm his award would create. He admitted banks had been guilty of “hubris” after 20 years of “unbridled expansion” leading up to the crash of 2008.
“I think in the case of the banking industry there was over-confidence and, with the benefit of hindsight, over-rewards,” he said.
He added that, while fairness in society was important, it should not be achieved by “cutting down success”.
“I believe strongly in issues to do with equality of opportunity. I believe in a progressive tax system – I have no problem in paying more tax,” he said.
However, he warned it was important not to “demonise” a sector which remained essential to the economy. Speaking about the removal of his predecessor’s title, he said: “Huge mistakes were made at RBS and in economic management all around the world by companies, countries and governments.”
But he said “personal vilification does not reflect well on the country”.
Mr Hester, chief executive of the 82 per cent state-owned bank, disclosed he had considered quitting amid the political storm but declined to say whether or not he had received any job offers that might have lured him away.
He did, however, say that he was committed to turning RBS into a winner and a bank in which investors would once again want to own shares.
“Can I win with RBS? As long as that is in the affirmative then what else I do is irrelevant,” he said. “I want to win with RBS.”
He said that dealing with the biggest balance sheet in the world was like a time-bomb that had to be defused and that removing £600 billion in assets was more than any bank or government had accomplished.
“We needed to rebuild the bank to compete successfully against others and to encourage people to buy our shares,” he said.
The bank had been forced to downsize, a process he regarded as the right one even though it meant the bank was “less global than we were”.
His policy towards selling assets such as an aircraft leasing business was that the bank had to decide what it was good at.
“If we do something we do it well, or we stop doing it,” he said.
But the row over his bonus overshadowed progress that had been made, including a rise in the share price from 9p when he took over in January 2009 to 29p currently. That represents a £20 billion boost to the bank’s market value, though it needs to hit 50p to break even on the £45bn the government injected to keep the bank afloat in 2008.
Mr Hester said that dealing with the political side of the job was “not my greatest speciality”, but emphasised that the job at RBS was made more difficult “because we have to do things that normal banks do not have to do”.
That included a £38bn bill for cleaning up the balance sheet mess created by the former management. This was bigger than the UK defence budget and included writing off bad debts, staff redundancies and selling unwanted businesses.
On the question of whether he would remain to see the task through, he said that, “I may not have the decision on that”, but said he had accepted the task of reviving RBS despite having a good job already.
“I took it because I am the sort of person who likes a professional challenge,” he said. But he had not expected the intensity of the row over his bonus. “Everyone was caught on the hop, including me,” he said.
Earlier in two radio interviews he said it would have been “indulgent for me to resign,” while admitting he had considered it.
Mr Hester said he decided to waive the bonus – which would have been paid in bank shares – because of the damage the row was doing to the bank itself. He admitted that it had taken its toll on him personally and that he had suffered some depressing moments.
While he had “great sympathy and understanding” for people concerned about the high rewards in the banking industry, such “societal issues” were ultimately a matter for politicians.
He said it was essential that RBS was able to recruit the best people to resolve the problems it had inherited from the former management and the events of recent days had made it harder.
He had to replace the whole senior management team of RBS and had taken that search around the world in order to attract the best people, he said.
He heaped praise on colleagues for doing a good job in “difficult conditions” and said they deserved recognition. He also said that the annual results later this month would reveal that the bank is ahead of the lending targets set under the Project Merlin agreement with the UK government and that its lending to small firms was almost equal to all the other banks put together.
However, he could not rule further erosion in jobs if conditions worsened. “All banks are affected by economic conditions. Recovery is slow and, therefore, bank recovery will be slow.
“So far we have kept on schedule, but there will be some headwinds.”
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Comments
There are 24 comments to this article
Page 1 of 2
moosef
Friday, February 10, 2012 at 11:16 AMThe brits have always loved a good hanging
antiparasite
Friday, February 10, 2012 at 03:37 AMIt's all a pantomine, that bad thing is that many believe it's all real... 'Fred' would have been given the kighthood so they could take it of him and have this show for the public, while the real bankers get away with raping the country and world, all from london ;)
vistaero
Thursday, February 9, 2012 at 05:58 PM21 Champit Tatties Bankers are just VERMIN. They contaminate and destroy everything they come into contact with.
Chappit Tatties
Thursday, February 9, 2012 at 04:59 PMHester should try to understand what most of us think of bankers. i.e. They are just like "slinkys" - no real use for anything, but you can't help smiling when they fall down the stairs!!!!
vistaero
Thursday, February 9, 2012 at 02:41 PMHowever, he could not rule further erosion in jobs if conditions worsened. “All banks are affected by economic conditions. Recovery is slow and, therefore, bank recovery will be slow. All Banks did not require governments throughout the World to bail them out. Barclays, HSBC, Clydesdale, Standard Chartered and many other Banks did not get themselves in massive debt. Again he is trying to say that this is effecting all Banks, rubbish, it is only the incompetent Directors, the Executive Directors that were on the Board that had no Banking Experience, that were on the Board to rubber stamp anything that came before them, ask no questions, and you will be handsomely paid. The greedy overpaid Fat Cats, who could not catch a cold in a flue epidemic They are all gone with millions of pounds, living in million pound homes, all answerable and accountable to nobody, and definitely no chance of any criminal charges against them..
vistaero
Thursday, February 9, 2012 at 01:00 PMAnd do the people of Scotland want to vote for independence with a financially Bankrupt Banking Industry, that will take years if not decades to pay back all the losses it has incurred, and where is the Banks going to get the money to pay back this debt, from the public, through increased Bank Charges, increased insurance premiums, increased mortgages etc.
aberdingdong
Thursday, February 9, 2012 at 12:56 PMHow dare he put Goodwin et als disgraceful conduct at the door of 'the country'. This must be one of the biggest slopes of shoulders I've seen in my life. So it's our fault now?....nice try mate, but there's an old adage from good and competent leaders that say 'the buck stops here'....Can you believe the hard neck of this guy?
vistaero
Thursday, February 9, 2012 at 12:51 PMWhat were RBS Auditors doing when Fred and the other fools were buying the Bankrupt Dutch Bank, were they all down at the red light district enjoying themselves, perhaps they knew more about the red light district that they did about finances, who were RBS Auditors, and why is someone not suing them for being financially illiterate. They were most likely friends of Fred and the other illiterate RBS Board of Directors.
e2toe4
Thursday, February 9, 2012 at 12:49 PMThe problem with Stephen Hester and indeed other bankers (and similar complaints are being heard from American bankers: "That people don't understand us.") is that they don't seem to feel any part of the wider world in which they 'earn' their self-allocated lottery wins every year.+++++++++++ Before their collapse it was a different world, but every single bank was tied into that system that ended in 2008, and so all are culpable++++I think this attempt to use poor old Fred as a kind of deflector shield shows that the mindset isn't changing----in a way we need diffrent bankers with different mindsets to rise up through the system because the ones there now, and the layer just below the Board room are an Ancien Regime that prove they cannot adapt to new realities.++++++++++ The personal attacks on individuals would be much less likely to happen were there adequate machinery to 'punish' as well as reward... not only 'not pay', but also 'claw back'-----these mechanisms do not exist so the people have only this method to express their judgement, it isn't great and it isn't 'fair', but at present taking down people on a case by case basis is the only way to bring reform to a system incapable of even admitting it needs reform....
vistaero
Thursday, February 9, 2012 at 12:45 PMEarlier in two radio interviews he said it would have been “indulgent for me to resign,” while admitting he had considered it. He did not resign because he saw the large Bonuses and Share options looming ahead of him, so that help to focus his mind and helped him overcome any thoughts he had about resigning. And has embarked on getting another bunch of overpaid, incompetent people to run the Bank, another lot of the right people that were allegedly running RBS into the ground over the last few years. And the Right kind of people were also found in the Bank of Scotland, they ran it into the ground and Bankrupted it also. I believe that Scotland cannot now and never again be trusted by any country to invest money or trust with finances, if so then they must be financially illiterate like the People that ran RBS and the Bank of Scotland. Better put your money in a metal box under your bed than allow the Scottish Banks to steal it, and remember Abtrust years ago the were gerrymandering shares, and thousands of investors lost most of their investments. We certainly know how to loose clients money in Scotland, and at the same time paying ourselves massive bonuses for doing so.
vistaero
Thursday, February 9, 2012 at 12:28 PMHE SAID. He had to replace the whole senior management team of RBS and had taken that search around the world in order to attract the best people, he said. Obviously more dishonest, incompetent and corrupt Bankers like Fred and all those he has had to replace, the incompetent and corrupt Bankers that got massive salaries, massive bonuses, and massive pensions, and they were just incompetent fools, the kind of people that he says have to be paid high salaries because they are the best people to run a Bank. HE SAID. That the Bank must pay high Salaries and Bonuses to get the best people into Banking. FRED GOODWIN. Got a grotesque Salary, and an even a more grotesque Bonus, and a grotesque Pension. And what did he do he bankrupted the Bank, along with all the other incompetent fools that are being replaced, and while they were Bankrupting the Bank they were getting grotesque salaries, pensions and bonuses, and after they Bankrupted the Bank they got further grotesque salaries, bonuses and pensions, and obviously a grotesque GOLDEN HANDSHAKE, in recognition for the outstanding services to Banking.
Navvy
Thursday, February 9, 2012 at 12:07 PMAt least Hester considered resigning. There has never been an indiation that the arrogant Goodwin ever did so. Hester admits to hubris at RBS and to a completely new management. Thes points are sufficient to condem Goodwin who, in my view, should be imprisoned for the rights issue made just before the collapse
saltpeter
Thursday, February 9, 2012 at 11:06 AMInteresting he had to replace the whole management team were they all that bad seems like fred was not alone after all but he took the hit
WOTTPI
Thursday, February 9, 2012 at 10:13 AMWhile he had “great sympathy and understanding” for people concerned about the high rewards in the banking industry, such “societal issues” were ultimately a matter for politicians------Well thats sums it up then. We bankers will continue to take what we believe we are worth. We will jump around form one highly paid job to another and ensure our mates are on renumeration boards and the like to make sure we keep our inflated salaries and bonuses. Social and corporate resonsibility - thats for others to worry about. We are above you all and want to keep it that way. Thank you and good night.
ItsTime
Thursday, February 9, 2012 at 09:31 AMHester didnt deserve to be demonised but it time that all these bankers were offered one-way tickets to leave the country. They are anti business.
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