Lord Higgins
Main Page: Lord Higgins (Conservative - Life peer)
Lord Higgins (Con)
My Lords, the restructuring of RBS is certainly to be welcomed but the gap between the price paid for the RBS shares and the price now is very significant. If the policy of the Official Opposition is that we should wait “till we get our money back”, we may wait a very long time indeed. Surely it is better, as the Chancellor proposes, to make a start in the process of disposing of these shares on what is the best basis at a particular moment of time. However, would my noble friend also agree that the practice of imposing fines on banks for misbehaviour has an adverse effect on their share price, penalises the shareholders and, in this particular case, penalises the taxpayer as well? There is no significant evidence that it has any deterrent effect on bad behaviour. Surely it is much better to go for the proposal now made by the Governor of the Bank of England, which I hope will be backed up by legislation, to impose heavy penalties—criminal penalties as well—on those who are actually responsible for causing the damage to the banking system which we have experienced in recent years.
Lord Ashton of Hyde
My noble friend is exactly right. He talked about fines on banks. It is very important, as he mentioned, that the Governor of the Bank of England spoke in his Mansion House speech of increasing penalties from seven to 10 years so that individuals know that they cannot play with the balance sheets of their banks and get away with it, and the penalties as such rest on the shareholders. I completely agree with him. Personally—no, “personally” is irrelevant. The Government think that, despite the fact that we increased regulation, made it more efficient and increased criminal penalties, the most important thing is the culture and ethics of the bank. That is from the top of the bank downwards. If bankers and their boards and chief executives know that and are absolutely determined that ethics should prevail, we will be in a much better position than we were. That is the single most important thing.