Pressure on more RBS executives to go

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British politicans heaped pressure on senior managers of Royal Bank of Scotland to force more top executives to resign on Monday days after the group announced a £390m settlement with regulators for attempting to manipulate Libor.

As they grilled the bank’s chairman and chief executive, MPs and peers also questioned the plausibility of the bank’s pledge to recover £300m of the fines from bankers’ bonuses. The promise was meaningless, they said, if it was not clear what the size of the bonus pool would have been without the proposed clawbacks.

“This must be more than an exercise in creative accounting,” said Andrew Tyrie, chairman of the Parliamentary Commission on Banking Standards. “It would be all too easy to artificially adjust a bonus pool, the size of which is yet to be decided.”

Members of the commission, including former chancellor Lord Lawson and Mr Tyrie, repeatedly queried why John Hourican, the outgoing head of RBS’ investment bank, had been the only senior executive to step down.

Although there is no suggestion he was involved in or knew of the Libor abuses, his tenure coincided with the period when they took place. Last week he resigned over the scandal and is to leave the bank next month.

“We thought one person should take primary accountability,” said Sir Philip Hampton, chairman of RBS. Testifying to the commission on Monday, Mr Hourican said: “I’m very sorry it happened on our watch.”

The announcement of Mr Hourican’s resignation helped shield chief executive Stephen Hester from the fallout. But the commission challenged why Peter Nielsen, RBS’s markets chief, who will be subject to bonus clawbacks, did not also quit. There is no suggestion that he knew of the Libor abuses but he was head of the global rates business which had responsibility for Libor.

Westminster blog: RBS testimony as it happened

Stephen Hester, chief executive of RBS, gives evidence to the Parliamentary Commission on Banking Standards less than a week after the bank was fined £390m by US and UK regulators for rigging the Libor rate

John Cummins, group treasurer, was also criticised over his role in telling regulators in 2011 that the bank had no control issues relating to Libor.

In its settlement the Financial Services Authority said the bank did not have any systems and controls in place for Libor until March 2011.

Mr Nielsen, who also appeared before the commission alongside Mr Hourican, said he had considered resigning but the bank believed it would be in a stronger position if he stayed.

Mr Hester added that hubris was at the heart of a broad “cultural failing in banking” which had been responsible for reckless expansion and the “excessively selfish and self-centred” attitude of bankers.

In its settlement, RBS acknowledged that 21 employees had tried to manipulate the London interbank offered rate, or Libor. The FSA said the bank’s traders in the US, UK, Japan and Singapore tried to rig Libor between 2006 and 2010, and one derivatives trader entered into “corrupt brokerage payments” to “garner influence”.