Libor Scandal: RBS Chiefs Quizzed At The Banking Standards Committee

'Don't Let My Death Be In Vain', Pleads RBS's Hourican

The only senior member of management at RBS to lose his job in relation to Libor rigging, pleaded with his colleagues to "not let my death be in vain", MPs heard at a banking standards committee hearing on Monday.

John Hourican, head of markets at RBS, who resigned over the Libor affair, told the committee it was right for him to stand down from his job as he had to "live by the principles that I adopt".

Having initially started shyly, Hourican came off the best of the three being questioned in the panel debate – which consisted of Hourican, Peter Nielsen, head of RBS's markets division, and Johnny Cameron, Hourican's predecessor.

Hourican also defended his colleagues who remained in their jobs, principally Nielsen and chief executive Stephen Hester.

Questions were initially posed by Rory Phillips QC on behalf of the Banking Standards Committee, which is headed by Andrew Tyrie MP.

Phillips said if Hourican was correct to stand down from his position, after admitting responsibility for the actions of the London Inter Bank Offer Rate (Libor) traders, why was it that the head of markets was able to remain in his position?

Nielsen responded that he had contemplated resigning, but believed the bank would be in a better position with him in place – an assertion that Hourican agreed with.

"I believe we've accomplished a great deal and I've appreciated playing a part in that," Nielsen told the committee.

Nielsen also avoided a direct question from Phillips on how much money RBS as a bank had made out of the Libor manipulation. Nielsen said the bank's investigations were ongoing but that so far the effect had been "minimal" and that it was more likely that any gain was made by the individual traders, rather than for the bank.

All three of the RBS senior management members were criticised for not knowing about the Libor manipulation and acting on it early enough.

The justification offered by the RBS chiefs was that Libor manipulation wasn't thought "mathematically possible" and so risk managers spent little time looking for it. The responsibility for finding such abuse rested with the immediate supervisors of the traders, and not senior management – something that also seemed to baffle the MPs present.

Johnny Cameron spoke at length about his view that the culture of traders had been to blame for the extent of the abuse – stressing that traders were "completely different to other bankers".

Cameron agreed not to take any job in the financial services industry as the result of a Financial Services Authority investigation in May 2010. Cameron, then 55 years old, was cleared of any misdemeanours, avoided a fine and made no admission of guilt, but was banned from taking any of the City's top financial jobs ever again.

"The need very tight and close management… but we didn't realise that this was a rate that could be fiddled," he told MPs.

"With hindsight, yes these dreadful things happened because the risk managers missed what we’re talking about."

Cameron added that he had tried to introduce a moral, ethical culture, but that he couldn't be expected to check all 15,000 staff members were following that code.

"It's shattering to us…but you can’t impose moral standards on people who don’t wish to be moral."

Former chief executive Fred Goodwin also came in for criticism for engaging in what Hourican described as “strategic tourism” – diversifying into too many markets, in too many countries with not enough capital.


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