INTERVIEW: Sir Philip Hampton, chairman RBS
‘We were too tough on some customers, not tough enough on others’
The chairman of Royal Bank of Scotland emerges from a dark corridor and looks surprisingly unruffled. This is in spite of suffering an hour’s mauling from shareholders who have used his final appearance in the job to tell him he has led an organisation that was incompetent and fraudulent, and everything in between.
“It’s not the first time,” he says, offering his reaction to the angry, but otherwise largely personable and mostly suited objectors who have just spent their afternoon lobbing verbal grenades at him. They include owners of small businesses who feel robbed of their prospects as well as their savings. They have come to tell the board how they have been ruined by its behaviour.
Sir Philip is now mingling among them and not a word is raised in anger. No need for all those security men, hands clasped over groins as if trained to expect a kicking where it hurts. As the anger dissipates into little more than a simmering frustration, the bank’s top team and its shareholders just want to shake hands and hope that it will be better next time. It is a typically British sort of protest: fire and brimstone followed by tea and cakes.
The outgoing chairman, who stepped down after nine years, used his valedictory speech to tell shareholders how the bank had made “great progress” since he took the job in the wake of the banking crisis. Not that they were really listening. One by one they grabbed the microphone to unburden themselves of their personal experiences. All bad, all aimed at the chairman. He stood his ground, accepting the bank had to answer to its critics and offering help where he could.
Sir Philip cut something of a lonely figure: helpless and largely unable to offer much comfort to his critics. He will probably spend some time replaying these and other criticisms as he heads to GlaxoSmithKline. He accepted that mistakes have been made, but in a short interview after Tuesday’s annual general meeting he attempted to assuage his critics and ask them to understand the board’s position.
“I accept that when people have lost their businesses it is a tough situation for them, but you have to recognise that in nearly every case the bank has also lost money supporting these businesses,” he said.
Indeed, the bank claims to have lost £2 billion in bad loans and Sir Philip says it was a consequence of the plunging economy in which everyone was a loser. However, he did accept that the bank may have been “too tough'” on some businesses.
“There were some customers we were too tough on and some on which we were not tough enough,” he said. “Some customers had valid issues with us, some have thanked us for our support. It is just a part of the job.”
Contrary to forcing firms into distress situations, he says RBS resisted pressure from the Bank of England to close down ‘zombie’ firms.
“Most of the attacks we received were because we were supporting companies we should be liquidating,” he said. “The Bank of England was telling us to do this.”
Yet even this was overshadowed by his biggest regret which was a failure by the authorities, while discussing the size of the bailout in 2009, to anticipate the fines that the bank would face.
“We assumed zero for misconduct. There were no conversations with government on how much we should set aside for fines. No one at the time was talking about libor [the fiddling of exchange rates], or other regulatory matters. If we had known what was coming we might have asked government for an extra £10 billion.”
That is the sum paid out, or due to be paid out, by RBS for fines and compensation for a series of mis-selling and other misdemeanours.
Sir Philip acknowledged speculation that he had a “bad” relationship with former chief executive Stephen Hester, but he said it was a “proper” relationship which involved “robust” discussions.
He said the two men had been long-time friends and that Mr Hester did a “fantastic” job. He said he wanted Mr Hester to stay on to complete his five year turnaround at the bank.
“The government said he should go sooner,” said Sir Philip.
Now he will leave what some regard as the biggest poisoned chalice in business, taking the lessons learned from a bruising nine years to the pharmaceuticals sector. Will he miss the rough and tumble at RBS? Sadly, he didn’t answer, bundled away by his aides to get a taxi to the airport.
Maybe what he’ll miss most is not getting the opportunity to restore RBS to full health and make his peace with those who will no doubt be back to taunt his successor Sir Howard Davies next year.