Ex-managers of RBS and HBOS admit their role in the crisis

On Tuesday appearing before a UK parliamentary committee the ex-executives of the Royal Bank of Scotland and HBOS brought their apologies for their conducing to UK economy downturn and the imminent collapse of their financial institutions. Among those who apologized for their ill-fated role in the current economy condition there was Dennis Stevenson, the former chairman of HBOS, Andy Hornby, former HBOS chairman, Tom McKillop and Fred Goodwin, respectively the former chairman and CEO of Royal Bank of Scotland.

In regards of what caused the RBS to come to the brink of a crash McKillop said that the acquisition of parts of ABN Amro was "a bad mistake" and that the bulk of what RBS paid for the Dutch group's investment banking arm will be written off as goodwill. Meantime, Hornby noted that the HBOS’ problems originated from the balance sheet growth over several years that made it over-reliant on wholesale funding.

Apart from this the committee members inquired the former heads of banks about the bonus payments to bankers. As it was reported earlier RBS was about to pay 1 billion pounds in bonuses for 2008 which in turn provoked anger of the UK Prime Minister Gordon Brown. Goodwin noted that the rates and currencies arm likely had a record quarter at the end of the year which means that the staff in the division will likely be expecting the reward. Expressing his opinion on the issue of bonus payments McKillop said that the system should be radically reconsidered. While under the current bonus culture in the investment banking side of the sector profits are divided up at the end of the year he said that a system where bonuses are paid out over four or five years might be more appropriate.