Anorak News | The Silence Of The Bankers

The Silence Of The Bankers

by | 14th, October 2008

For months Anorak has been calling for heads on the block. For months we have said the banking system was the cause of the present crisis and not the use of hedge funds or marginal calls.

Too late the penny has dropped with UK Financial Services Authority. It’s staff of regulators watched Chairman Matthew Ridley and the inexpressible Chief Executive Adam Applegarth run Northern Rock from safe, dependable, building society to a runaway bank going over a cliff. Both Applegarth and Ridley walked away with pay-off deals intact.

It turns out they were nowhere near the worst and may now be classed as rank amateurs in the esoteric world of low-dealing high financiers.

Anorak had railed at the position in the Royal Bank of Scotland where high to middle-order executives (dedicated but not very exciting accountants and so on) were thriving on a bonus culture. All were on very high salaries but were then paid fabulous quarterly-based bonuses (often in the hundreds of thousands) for doing unexacting-quite-ordinary jobs. Certain staff even followed the RBS sponsored Scotland National Rugby squad around the world. Hong Kong International Sevens rings a bell. A lot of this culture was imported at around the time of the RBS and NatWest merger.

Yesterday the gloves came off when, as part of the banking bale out, the FSA demanded and got necks on the block.

In a required statement to the London Stock Exchange yesterday, the Royal Bank said its chief executive Sir Fred Goodwin, chairman Sir Tom McKillop, and one Johnny Cameron will all step down from the board.
I, for one, think the two bankers should have their knighthoods stripped as part of the process recognising their disgraceful failure. They are also taking several months to quit the bank completely, so are still salaried. Bonuses are unlikely to be honoured.

The trap door has also opened for Andy Hornby, HBOS chief executive and HBOS chairman Lord Dennis Stevenson.

In a belated “honourable thing” move Hornby and Goodwin have, allegedly, “waived” massive parachute payments.

Johnny (The Kid) Cameron,CEO, Corporate Bank and Financial Markets, Royal Bank of Scotland, is the man who ran the RSB’s high-risk corporate and investment banking arm, he is the arch-exponent of the methods the Financial Services Authority (FSA) now wants to outlaw. Johnny the Kid has been gunned down. The 53-year-old’s payments in salary and bonus in 2007 were £2.9m

Johnny “The Kid” Cameron
Johnny Cameron BA (Hons) (Oxon), MSc (MIT), FCIBS
Chairman of Global Markets, Chief Executive Officer of Corporate Markets and Executive Director, Royal Bank of Scotland Group plc

Age 53 Total Annual Compensation as of fiscal year 2007 £2,888,000 GBP.
Board Relationships: This person is connected to 71 board members in 3 different organizations across the banking industry

Then came, I think in a another first, an open letter from the FSA to banking chief executives. In it the FSA criticised a culture which encouraged and rewarded risk-taking with hefty bonuses It then followed the Anorak line and said “inappropriate” pay deals may have been one of the actions leading to the crisis.

Too little and £37 billion too late.

Pundits now say banking world-wide could be shifting its position from blaming the problems on the US sub-prime mortgage crisis to the jarring, juddering, that little e-rag Anorak’s mantra ALL bankers were acting irresponsibly.

Hello? Hello? See Move over Darling.

In its letter, the FSA said banks “frequently gave incentives to staff to pursue risky policies, undermining the impact of systems designed to control risk, to the detriment of shareholders and other stakeholders, including depositors, creditors and ultimately taxpayers”.

An example of bad practice given by the regulator was “employee bonuses calculated solely on the basis of financial performance”.

There is no pleasure in this…we told you so months ago

..and the sting in this particular tale? Step into any branch of the RBS, HBOS or Lloyds-TSB and what do you find? There at coal-face there are palid and grey-faced staff who are under instructions from on high to SELL! SELL! SELL!! Targets have been lifted, the reluctant staff have been ORDERED to issue more credit cards and loans than ever before.

Why? It’s simple, the culture the FSA is so belatedly berating is so endemic, it is engrained, the reaction to the crisis from that bonus-culture senior to middle management is…spread the load as far and as widely as possible. Get Joe Public embroiled and if there’s a first charge on the property then so much the better.

Time the guillotine was re-introduced for sticky fingers?

One last question. Who was Chancellor of the Exchequer while this situation was allowed to build up?
Answers on a post card to Labour NEC, The Labour Party, 39 Victoria Street, London SW1H 0HA

See The Guardian’s: Bosses Pay The Price


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