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Archbishop Of Canterbury-Elect Justin Welby takes On RBS Boss Stephen Hester

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The incoming Archbishop of Canterbury has taken one of the country's most senior bankers to task over his industry's social role.

Justin Welby accused Royal Bank of Scotland (RBS) boss Stephen Hester of resorting to "motherhood and apple pie" responses as he grilled him on the financial giant's "duty to society".

The exchanges came as Mr Hester and other bank chiefs gave evidence to the parliamentary commission on banking standards.

justin welby

The Bishop of Durham clashed with the RBS boss at the parliamentary commission on banking standards

Mr Welby, who is Bishop of Durham until he formally succeeds Rowan Williams next year, raised previous evidence from senior Bank of England official Andy Haldane indicating that financial institutions did not create economies of scale once they reached a certain size, but sucked in talent and capital.

He challenged Mr Hester on why he had not made any references to state-controlled RBS's wider duties to society, even though the whole country suffered due to the credit crunch.

"What is the duty of an enormous bank like yours, approaching 100% of GDP, well into the hundreds of billions of pounds, what is your duty to society, and why didn't you mention it?" Mr Welby said.

Mr Hester replied: "I think that any big company, whether a bank or a big large company, if you are good, part of what you are doing is you are a good citizen.

"You are a positive contributor to society. I think that most of the ways you achieve that are through your direct operations, so by doing a good job for customers... that is the important thing, by servicing savers and so on, through shareholders, by employing people responsibly, by paying taxes... on the whole range of ways you impact the world around you."

But Mr Welby, a former oil industry executive, broke in to demand a "more penetrating analysis". "That again, is motherhood and apple pie. I am really looking for a bit more penetrating analysis of what your duty is to society - other than just obeying the law and paying taxes," he said.

Mr Hester denied that he was merely using warm words, insisting: "The reason why people use the phrase 'motherhood and apple pie' is not just because it is obvious and everyone says it. Everyone says it for a reason, because it is true.

"So everyone talks about serving customers well, but that's not an excuse for people not serving customers well."

He added: "There was no shortage of banks seeking to serve customers well. They didn't do it as well as we would all want... Banks didn't deliberately make themselves unsafe."

Mr Welby suggested Mr Hester didn't agree with Mr Haldane's "very challenging evidence".

"He said we need to go to much greater simplicity. He was effectively saying the ringfenced bank is a utility, it needs to be providing utility services in the way we get water out of a tap."

The incoming Archbishop said the conclusion seemed to be that banks were more of an "advantage to society" when they were "simple and small and not that exciting".

However, Mr Hester insisted he had never shied away from critiques of the banking industry before the crunch, saying it was "trying to be exciting and it shouldn't be".

He believed the industry would be more "pedestrian" and predictable in future.

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