RBS Chairman voices regrets over LIBOR scandal

7th Feb 2013 14:08

Royal Bank of Scotland's Chairman Philip Hampton said he regrets mistakes that were made on his watch in relation to LIBOR rigging. In a live question and answer session on The Guardian's website Thursday, Hampton said he accepted the full weight of charges against the bank's role in the interest rate scandal. His comments come a day after the group agreed to pay penalties of £87.5m, $325m, and $150m to the Financial Services Authority (FSA), Commodity Futures Trading Commission (CFTC) and Department of Justice (DOJ), respectively. "If people break the law they should face the full weight of the criminal justice system," Hampton said in response to a reader's query about whether he believed interest rate rigging warranted criminal prosecution."We have already seen traders at other banks arrested over LIBOR manipulation and I expect we will see more. That is how it should be. If people don't end up in prison over this scandal I worry it will further perpetuate the sense that there is one rule for the financial system and another set of rules for the rest of society. That's dangerous and it's wrong. In the case of former RBS traders the authorities now have plenty of evidence to look at and I expect they will be doing just that. If we can help them, we will."The company entered into a deferred prosecution agreement in relation to one count of wire fraud for Swiss Franc LIBOR and one count for an antitrust violation relating to Yen LIBOR. RBS Securities Japan also entered a plea of guilty to one count of wire fraud relating to Yen LIBOR. The investigations uncovered wrongdoing of 21 employees, predominantly in relation to the setting of the bank's Yen and Swiss Franc LIBOR submissions. Hampton said they should face the full brunt of the law.All of the regulators concluded that RBS, as a firm, had not engaged in any 'deliberate misconduct'. One reader of the UK newspaper's site raised the concern that taxpayers would foot the bill of the 81% state-owned lender's fine.Hampton insisted RBS would protect the interests of the taxpayers who own a great majority of the shares. "These fines are a big cost and we need to try to recover those costs. As very obvious place is from the more highly paid employees that we have," he said."We plan to recover all of the money that will be paid to settle the US fines from pay."He added that he believed bankers salaries were too high, particularly in investment banks.However, he said bonuses were needed to keep quality employees at the firm. Hampton reiterated his earlier point that the banking culture needs fixing but said changes would not happen overnight. "To achieve it we have to think about training; about incentives; about the products we should be offering and the products we need to stop offering; about the way we recruit people and the sort of values we want to promote. The list goes on," he said, adding that banks should only give out mortgages to those who can afford to pay back interest.He concluded by touching on the role banks played on shaping the economy. It was in response to a question about comments made by Chancellor George Osborne who said banks had a major impact on the global financial climate."The financial crisis centred on the banks has had a massive impact on the performance of the economy, on jobs and living standards," Hampton said. "It's why we need to make sure that we don't have a repeat of a financial crisis by making sure that the banks are soundly financed and properly managed."Shares fell 1.17% to 338.10p at 14:52 Thursday.