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RBS bankers must pay Libor fine, says George Osborne RBS bankers must pay Libor fine, says George Osborne
(35 minutes later)
George Osborne declared on Monday he had instructed Royal Bank of Scotland to ensure its bankers pick up the cost of the upcoming multimillion-pound fine for Libor rigging, rather than taxpayers.George Osborne declared on Monday he had instructed Royal Bank of Scotland to ensure its bankers pick up the cost of the upcoming multimillion-pound fine for Libor rigging, rather than taxpayers.
The chancellor said this would defuse public anger about the portion of the fine – which could amount to £500m in total – that will be paid to the US authorities as he gave his support to the RBS boss Stephen Hester.The chancellor said this would defuse public anger about the portion of the fine – which could amount to £500m in total – that will be paid to the US authorities as he gave his support to the RBS boss Stephen Hester.
However, Osborne indicated other heads would roll as the bank made changes to its management in the wake of the Libor fine which could be announced in the coming days.However, Osborne indicated other heads would roll as the bank made changes to its management in the wake of the Libor fine which could be announced in the coming days.
He was speaking in Bournemouth to outline threats to break up banks if they did not comply with new rules and to pledge to make it easier for customers to move their accounts.He was speaking in Bournemouth to outline threats to break up banks if they did not comply with new rules and to pledge to make it easier for customers to move their accounts.
Responding to questions about why bankers should receive bonuses after a year of scandal, Osborne acknowledged that Hester and Barclays boss Antony Jenkins had already waived their bonuses.Responding to questions about why bankers should receive bonuses after a year of scandal, Osborne acknowledged that Hester and Barclays boss Antony Jenkins had already waived their bonuses.
He said there could have been "enormous public anger" if fines levied on RBS by US regulators were paid by taxpayers not the bankers.He said there could have been "enormous public anger" if fines levied on RBS by US regulators were paid by taxpayers not the bankers.
"That is not on," said Osborne who said he has told the bank management that the fine to international regulators should be paid out of the bonus pool."That is not on," said Osborne who said he has told the bank management that the fine to international regulators should be paid out of the bonus pool.
Around four-fifths of the fine is likely to go US regulators. The UK fine will go to UK taxpayers.Around four-fifths of the fine is likely to go US regulators. The UK fine will go to UK taxpayers.
"That could have been a very great source of public anger this spring," said Osborne."That could have been a very great source of public anger this spring," said Osborne.
The fine for Libor rigging could be announced in the coming days but the bonus pool is unlikely to big enough to cover the fine. Bonuses are likely to be clawed back and bonuses in the future will also be smaller.The fine for Libor rigging could be announced in the coming days but the bonus pool is unlikely to big enough to cover the fine. Bonuses are likely to be clawed back and bonuses in the future will also be smaller.
Referring to suggestions that John Hourican, the head of the investment bank, will resign Osborne said: "We'll see what these decisions are."Referring to suggestions that John Hourican, the head of the investment bank, will resign Osborne said: "We'll see what these decisions are."
He said Hester is "taking the action to ensure those responsible are held to account".He said Hester is "taking the action to ensure those responsible are held to account".
In his speech on banking reform, Osborne said he make it easier to move bank accounts through changes to the behind the scenes plumbing in the financial system. In his speech on banking reform Osborne said he would make it easier to move bank accounts through changes to the behind the scenes plumbing in the financial system.
"From September this year, every customer of every bank in Britain will be able to switch their bank account from their existing bank to another one in seven days. All they will have to do is sign up to a new bank – and the rest will follow," said Osborne, building on the proposals in the Vickers reform on banking. "All the direct debits, the standing orders, everything will be switched for you with no hassle," he added. "From September this year every customer of every bank in Britain will be able to switch their bank account from their existing bank to another one in seven days. All they will have to do is sign up to a new bank – and the rest will follow," said Osborne, building on the proposals in the Vickers reform on banking. "All the direct debits, the standing orders, everything will be switched for you with no hassle," he added.
He has not required banks to make accounts portable but instead accepted measures from the banks to make it easier to move bank accounts.He has not required banks to make accounts portable but instead accepted measures from the banks to make it easier to move bank accounts.
As he promised to channel anger towards banks into "change, to build a banking system that works for us all", he said that the plumbing in the system would be opened up so that new banks did not have to rely on existing banks to be able to move money around the system.As he promised to channel anger towards banks into "change, to build a banking system that works for us all", he said that the plumbing in the system would be opened up so that new banks did not have to rely on existing banks to be able to move money around the system.
"Asking your rival to provide you with the essential services you need at a reasonable price is not a recipe for success. And iin other walks of life, like telecoms, we don't operate like that," he said. "Asking your rival to provide you with the essential services you need at a reasonable price is not a recipe for success. And in other walks of life, like telecoms, we don't operate like that," he said.
"I want new faces on the high street. I want upstart challengers offering new and better services that shake up the established players," he said."I want new faces on the high street. I want upstart challengers offering new and better services that shake up the established players," he said.