Royal Bank of Scotland: LIBOR

Lord Empey Excerpts

Wednesday 4th July 2012 Lords Chamber

Asked By

[Lord Empey]

To ask Her Majesty’s Government whether and when they were made aware by the Royal Bank of Scotland that the bank had dismissed employees for inappropriate behaviour in relation to setting LIBOR rates.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, the Government are aware that several banks are being investigated by the Financial Services Authority in relation to the setting of the LIBOR rate. While the investigation is going on, it would be inappropriate to comment on any specifics relating to the Royal Bank of Scotland. My right honourable friends the Prime Minister and the Chancellor of the Exchequer announced the Government’s response to the LIBOR issue on Monday.

[Lord Empey]

I thank the Minister for his response. Before I ask my principal supplementary question, I ask: will the Minister comment on the disastrous handling by RBS Group of the customers of Ulster Bank, who are still suffering over two weeks after the crisis began?

With regard to my main Question, will the Minister tell us what instructions he has given to UK Financial Investments Ltd, which looks after taxpayers’ interests with regard to shares held by the Government in various banks? Can he assure the House that the reporting mechanisms back to the Treasury as principal shareholder, particularly in RBS, will be such as to enable the Government to pick up evidence of any malpractice or inappropriate behaviour at an early stage?

[Lord Sassoon]

My Lords, on the RBS/NatWest/Ulster Bank IT failure, RBS has assured customers that nobody will be left out of pocket as a result of the problems. There is a Question down for tomorrow—number 4—from the noble Lord, Lord McAvoy, that touches on Ulster Bank, so I am sure we will return to that tomorrow.

On the instructions to RBS and the monitoring of them, the Government manage their shareholdings in RBS at arm’s length through UK Financial Investments and the governance arrangements are set out in the framework document and the investment mandate between UKFI and the Treasury. It is all there transparently on the website. I believe that those arrangements continue to be appropriate for the arm’s-length management. As it happens, UKFI published its annual report only this week. It sets out a very full account of the issues that it has been engaged in with RBS and with Lloyds Bank. I believe that all the appropriate channels are there and that there is a high degree of transparency. I can reassure the noble Lord on that.