Top investment banker resigns over rate-rigging

Royal Bank of Scotland’s top investment banker yesterday insisted he had resigned to take full responsibility for staff who rigged interest rates.

John Hourican, who is due to leave at the end of the month, said he had urged another senior executive not to fall on their swords over the abuses. The comments came as Mr Hourican gave evidence to the Parliamentary Commission on Banking Standards.

Majority state-owned RBS was fined £390m by US and UK regulators last week after evidence emerged of traders fixing the Libor interbank lending rate. Twenty-one staff have left or have been disciplined in the wake of the revelations but Mr Hourican is the only senior figure to go, sacrificing millions of pounds in bonuses and share options.

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He told the cross-party commission: “I do accept responsibility for the behaviour of our staff and therefore I accept responsibility for the failings that we have found.

“It is important that we do not talk about accepting responsibility and then not do so in our actions. That is why I have resigned.”

Peter Nielsen, chief executive of RBS Group’s markets division, said he also contemplated quitting. “Of course I contemplated resigning,” he said. “Indeed John and I talked about it. We talked about myself going instead of him.”

Mr Hourican said: “This has been a long and considered discussion between myself and my chief executive Stephen Hester. It was my considered opinion that ... the stakeholders, the employees and indeed our customers would be better served by Peter remaining at the bank.”

The pair – appearing alongside former RBS chairman of global banking and markets Johnny Cameron – repeatedly conceded that, with hindsight, risks should have been seen and abuses halted but insisted that they had not been aware of them.

Mr Hourican defended his decision to prioritise keeping the bank in existence at all after the “cardiac arrest” of the wider banking crisis. “It is utterly reprehensible that people, at that moment, felt they could continue with the behaviours that they were doing and we didn’t find it,” he said.

“But it is the case that we prioritised the existential existence of this bank for the first number of months and years of managing it.”

Mr Cameron said the blame for the scandal lay with the nature of traders, some of whom “do not wish to be moral”.