Former bosses say "sorry" for British bank failures

Special Report:Global Financial Crisis

LONDON, Feb. 10 (Chinese media) -- For the first time, four former bosses of the two major British banks which were hard-hit by the credit crisis, said "sorry" for their failures here on Tuesday.

Former Royal Bank of Scotland Chief Executive Sir Fred Goodwin told MPs on the Treasury Committee he "could not be more sorry" for what had happened.

Tom McKillop, former RBS chairman, Andy Hornby, former Chief Executive of HBOS and HBOS' former Chairman Lord Stevensen were also there to express their apology at the Parliament.

The former bank chiefs also said the bonus culture had contributed to the crisis and needed to be reviewed.

Tom McKillop, former RBS chairman, also admitted that his bank's much-criticized purchase of Dutch rival ABN Amro had been a "big mistake."

The former bosses, along with other bankers, have been criticized for taking huge bonuses from banks that later had to rely on taxpayer money to survive.

Fred Goodwin said he had taken no bonus that year, but that he had taken home a salary of 1.46 million pounds (about 2.17 million U.S. dollars).

Andy Hornby, former chief executive of HBOS, is said to have got a salary of 1.93 million pounds (about 2.86 million U.S. dollars), including bonus and benefits in 2007.

Hornby said he had also not taken a bonus last year, and that he had never taken any bonus in the form of cash.

"I have never received one single penny in cash bonus," he said, referring to his time not only as boss of HBOS but also his time on the board.

Instead, he said, he had taken his bonuses in the form of shares.

Hornby conceded that the culture, where bankers can receive many times their salary in cash bonuses, did need to be looked at.

Tom Mckillop, the former RBS chairman who got the 750,000 pounds salary in 2007, said that a fundamental review of remuneration was needed.

But when asked whether the bonus culture encouraged excessive risk taking and had exacerbated the banking crisis, Fred argued that traders had been trading within set limits, and had simply been doing "what they were authorized to do."

Fred oversaw a number of acquisitions that made Edinburgh-based RBS one of the world's biggest banks.

But his 10 billion pounds deal to buy Dutch rival ABN Amro late in 2007 is now seen as ill-timed and a deal too far in light of RBS' inability to survive the credit crunch without a massive injection of government funds, according to BBC on Tuesday.

Sir Tom admitted to the committee that the deal to buy ABN was "a big mistake."

"We bought it at the top of the market and anything we paid was an error. We are sorry we bought ABN Amro," he said.

Sir Fred said it was a "bad decision and certainly mistimed."

He said the size of RBS, together with its lack of cash following the ABN Amro, made it particularly susceptible to the credit crunch.

RBS is now nearly 70 percent-owned by the taxpayer after a government rescue package was put in place at the end of last year.

Lord Stevenson, former chairman of HBOS, had an annual salary of 821,000 pounds including benefits in 2007.

Stevenson said the mistake the bank made was a failure to predict the credit crunch, which effectively froze access to new funds.

"The fundamental mistake of HBOS was the failure to predict the wholesale collapse of the wholesale markets," he said.

HBOS was rescued by Lloyds and the merged group is now more than 40 percent-owned by the government.

The bosses still in place at the helm of Britain's leading banks will appear before the Treasury Committee on Wednesday.