This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.
You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/8050884.stm
The article has changed 7 times. There is an RSS feed of changes available.
| Version 1 | Version 2 |
|---|---|
| Minister blasted over RBS pension | Minister blasted over RBS pension |
| (40 minutes later) | |
| City minister Lord Myners has been criticised by MPs for "naivete" in his handling of ex-Royal Bank of Scotland (RBS) boss Sir Fred Goodwin's pension. | City minister Lord Myners has been criticised by MPs for "naivete" in his handling of ex-Royal Bank of Scotland (RBS) boss Sir Fred Goodwin's pension. |
| Sir Fred - nicknamed The Shred - gets £703,000 a year from the bank which almost collapsed under his leadership. | Sir Fred - nicknamed The Shred - gets £703,000 a year from the bank which almost collapsed under his leadership. |
| But Lord Myners should have given RBS a "clearer, stronger direction" that failure was not to be rewarded, the Treasury Committee report said. | But Lord Myners should have given RBS a "clearer, stronger direction" that failure was not to be rewarded, the Treasury Committee report said. |
| The report also blamed bonus cultures at City banks for the financial crisis. | The report also blamed bonus cultures at City banks for the financial crisis. |
| Remuneration policies had led to "a lethal combination of reckless and excessive risk-taking", said the report, the committee's third into the crisis. | Remuneration policies had led to "a lethal combination of reckless and excessive risk-taking", said the report, the committee's third into the crisis. |
| 'Too much trust' | 'Too much trust' |
| RBS is now 70% owned by the taxpayer after a £20bn government bail-out. | RBS is now 70% owned by the taxpayer after a £20bn government bail-out. |
| The MPs said that Sir Fred had become a "highly visible emblem of bankers damaging the economy without themselves being penalised". | The MPs said that Sir Fred had become a "highly visible emblem of bankers damaging the economy without themselves being penalised". |
| The RBS board had shown itself to be incompetent in the management of the bank, steering it towards catastrophe, and also possibly dominated by Sir Fred Treasury Committee report | The RBS board had shown itself to be incompetent in the management of the bank, steering it towards catastrophe, and also possibly dominated by Sir Fred Treasury Committee report |
| Controversy was sparked after the bank's board boosted Sir Fred's pension by deciding to treat him as having retired at the request of the bank - making no reductions to the pension for early retirement. | Controversy was sparked after the bank's board boosted Sir Fred's pension by deciding to treat him as having retired at the request of the bank - making no reductions to the pension for early retirement. |
| Lord Myners said he had no knowledge of this approach, but the MPs said that the minister should not have allowed the bank to handle the pension negotiations on its own. | Lord Myners said he had no knowledge of this approach, but the MPs said that the minister should not have allowed the bank to handle the pension negotiations on its own. |
| "The RBS board had shown itself to be incompetent in the management of the bank, steering it towards catastrophe, and also possibly dominated by Sir Fred," the report said. | "The RBS board had shown itself to be incompetent in the management of the bank, steering it towards catastrophe, and also possibly dominated by Sir Fred," the report said. |
| "There were no grounds for trusting them with this operation. | "There were no grounds for trusting them with this operation. |
| "We suspect that Lord Myners' City background, and naivete as to the public perception of these matters, may have led him to place too much trust in the RBS board." | "We suspect that Lord Myners' City background, and naivete as to the public perception of these matters, may have led him to place too much trust in the RBS board." |
| WHO IS LORD MYNERS? As City minister and one of a select band of City experts drafted in by the PM, he battled to stop the collapse of the banking system last autumn Carried out an influential review of pension fund regulation in 2000 for Mr Brown, the then chancellor Former teacher, financial journalist, banker and pension fund manager | WHO IS LORD MYNERS? As City minister and one of a select band of City experts drafted in by the PM, he battled to stop the collapse of the banking system last autumn Carried out an influential review of pension fund regulation in 2000 for Mr Brown, the then chancellor Former teacher, financial journalist, banker and pension fund manager |
| Lord Myners had the option "to insist that Sir Fred should be dismissed", the MPs added, a move which would have seen the ex-RBS chief entitled to a much smaller £416,000 a year pension from the age of 60. | Lord Myners had the option "to insist that Sir Fred should be dismissed", the MPs added, a move which would have seen the ex-RBS chief entitled to a much smaller £416,000 a year pension from the age of 60. |
| However, the committee acknowledged that at the time the decision was made, the government had been in desperate negotiations with banks over rescue packages. | However, the committee acknowledged that at the time the decision was made, the government had been in desperate negotiations with banks over rescue packages. |
| "Returning to the bigger picture, we accept that the Treasury's key responsibility was to support the banks at a time when markets were exceptionally jittery and when a grave systemic crisis was only hours away," it said. | "Returning to the bigger picture, we accept that the Treasury's key responsibility was to support the banks at a time when markets were exceptionally jittery and when a grave systemic crisis was only hours away," it said. |
| 'Self-pity' | 'Self-pity' |
| Earlier this year, Sir Fred was among former bank bosses who gave evidence to the Treasury Committee in testimonies which began with apologising for their banks' failings. | Earlier this year, Sir Fred was among former bank bosses who gave evidence to the Treasury Committee in testimonies which began with apologising for their banks' failings. |
| FROM THE TODAY PROGRAMME More from Today programme | |
| But the report said the apologies from executives, "had a polished and practised air". | But the report said the apologies from executives, "had a polished and practised air". |
| Other ousted executives included Andy Hornby, the ex-leader of HBOS, which had to be rescued by the Lloyds Banking Group. | Other ousted executives included Andy Hornby, the ex-leader of HBOS, which had to be rescued by the Lloyds Banking Group. |
| "These witnesses also betrayed a degree of self-pity portraying themselves as the unlucky victims of external circumstances," the report said. | "These witnesses also betrayed a degree of self-pity portraying themselves as the unlucky victims of external circumstances," the report said. |
| 'Cosy cartels' | 'Cosy cartels' |
| It added that while discriminating between whether individuals or the force of global circumstances were to blame was difficult, the fact that some banks had not required taxpayer assistance made "the charge of management failure impossible to resist". | It added that while discriminating between whether individuals or the force of global circumstances were to blame was difficult, the fact that some banks had not required taxpayer assistance made "the charge of management failure impossible to resist". |
| KEY FINDINGS OF THIRD TREASURY COMMITTEE REPORT Bonus culture in banks needed to be overhauled Shareholders had failed to scrutinise decisions by company board and management Auditors had failed to highlight developing problems in the banking system The media had acted "generally responsibly" in its coverage of the financial crisis | KEY FINDINGS OF THIRD TREASURY COMMITTEE REPORT Bonus culture in banks needed to be overhauled Shareholders had failed to scrutinise decisions by company board and management Auditors had failed to highlight developing problems in the banking system The media had acted "generally responsibly" in its coverage of the financial crisis |
| "The banks that have failed did so because those leading and managing them failed." | "The banks that have failed did so because those leading and managing them failed." |
| The Treasury committee, said the crisis had "exposed serious flaws and shortcomings" in remuneration policies. | The Treasury committee, said the crisis had "exposed serious flaws and shortcomings" in remuneration policies. |
| Committee chairman John McFall said that "the design of bonus schemes was not aligned with the interests of shareholders and the long-term sustainability of the banks and has proved to be fundamentally flawed". | Committee chairman John McFall said that "the design of bonus schemes was not aligned with the interests of shareholders and the long-term sustainability of the banks and has proved to be fundamentally flawed". |
| The report highlighted practices such as cash bonuses paid immediately, regardless of the long-term impact of a deal or transaction. | The report highlighted practices such as cash bonuses paid immediately, regardless of the long-term impact of a deal or transaction. |
| And non-executive directors of banks had been ineffective, in failing to control excess and largesse, Mr McFall added, accusing them of forming "cosy cartels" on remuneration committees. | And non-executive directors of banks had been ineffective, in failing to control excess and largesse, Mr McFall added, accusing them of forming "cosy cartels" on remuneration committees. |
| We have a suspicion that many bankers remain unconvinced by the need for change and believe that, once 'the storm dies down', it will be a case of 'business as usual' Treasury Committee | We have a suspicion that many bankers remain unconvinced by the need for change and believe that, once 'the storm dies down', it will be a case of 'business as usual' Treasury Committee |
| He cited evidence of non-executives being "all too willing to sanction the ratcheting up of senior managers' pay, whilst setting relatively undemanding performance targets." | He cited evidence of non-executives being "all too willing to sanction the ratcheting up of senior managers' pay, whilst setting relatively undemanding performance targets." |
| While governments, politicians, regulators and central bankers had also failed to check the culture of excessive risk taking driven by bonuses, the bards of banks "must also take a large share of the blame" he said. | While governments, politicians, regulators and central bankers had also failed to check the culture of excessive risk taking driven by bonuses, the bards of banks "must also take a large share of the blame" he said. |
| The report added that genuine reform was needed to prevent a return to previous excesses - including the use of powers to get back bonuses where they had been given unfairly. | The report added that genuine reform was needed to prevent a return to previous excesses - including the use of powers to get back bonuses where they had been given unfairly. |
| "We have a suspicion that many bankers remain unconvinced by the need for change and believe that, once 'the storm dies down', it will be a case of 'business as usual'," the report said. | "We have a suspicion that many bankers remain unconvinced by the need for change and believe that, once 'the storm dies down', it will be a case of 'business as usual'," the report said. |
| And the city watchdog, the Financial Services Authority (FSA) was urged "not to shy away" from using powers to sanction firms over poor pay practices and give regular updates on its progress. | And the city watchdog, the Financial Services Authority (FSA) was urged "not to shy away" from using powers to sanction firms over poor pay practices and give regular updates on its progress. |
| "We are concerned that the FSA seems not be taking tackling this issue seriously enough," Mr McFall said. | "We are concerned that the FSA seems not be taking tackling this issue seriously enough," Mr McFall said. |
| However the watchdog refuted the charges, and said that payment structures had been one of its main focuses for the past year. | However the watchdog refuted the charges, and said that payment structures had been one of its main focuses for the past year. |
| It said it had done "considerable work" on remuneration and added that it would "take action if we believe firms have remuneration policies that may encourage unacceptable levels of risk". | It said it had done "considerable work" on remuneration and added that it would "take action if we believe firms have remuneration policies that may encourage unacceptable levels of risk". |
| The Treasury Committee report did not call for bonuses to be done away with at part-nationalised banks, Lloyds Banking Group and RBS, especially for staff on modest salaries, who should "not be penalised for failures at the top of the organisation". | The Treasury Committee report did not call for bonuses to be done away with at part-nationalised banks, Lloyds Banking Group and RBS, especially for staff on modest salaries, who should "not be penalised for failures at the top of the organisation". |