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Welby criticises bankers

22 February 2013

PA

THE Archbishop of Canterbury has interrogated executives of the Royal Bank of Scotland (RBS) about the moral culture of the banking business.

Archbishop Welby is a member of the Parliamentary Commission on Banking Standards, which took evidence from the RBS a week after the Financial Services Authority (FSA) fined the bank £87.5 million for misconduct relating to the Libor rate between 2006 and 2010.

The FSA had found that misconduct at RBS was "widespread". At least 219 requests for inappropriate submissions of the Libor rate were documented, and at least 21 individuals and at least one manager were involved in the "inappropriate conduct".

On Monday of last week, the Archbishop pressed Johnny Cameron, the former chairman of Global Banking and Markets, RBS Group, on his assertion that "you can't impose moral standards on people who don't wish to be moral." He asked Mr Cameron: "How do you test for the moral culture of a trading floor? Because from what you've said, I get the impression you don't think it's possible." He suggested that there existed in RBS "an incapacity to recognise the human-generated risks".

Mr Cameron, after saying that the Archbishop was "straying into very philosophical territory", argued that controls were in place to protect banks against traders' misbehaviour, but no one had envisaged "that Libor could be fiddled by a cartel of traders across many banks". This had been an "enormous hole" in risk management.

Mr Cameron agreed that nobody had blown the whistle on the misconduct, and he could not suggest how a culture could come about that would encourage even one person to do this. The Archbishop said that banks should become "a heck of a lot simpler".

The Commission also heard from Stephen Hester, Group Chief Executive. Mr Hester said that the behaviour of those involved in the Libor scandal "had brought shame on the bank". It was redolent of "a selfish and self-serving culture in the banking industry as a whole".

But he argued that "we have done huge things to rescue a situation for the company and for society".

The chairman of the RBS Group, Sir Philip Hampton, said that Mr Hester had one of the most demanding jobs in world business; and that his pay - potentially a package of £7.8m - was "modest" in comparison to that of his peers.

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