Royal Bank of Scotland (FSA Report)

Nadhim Zahawi Excerpts

Monday 12th December 2011 Commons Chamber

[Mr Hoban]

The hon. Gentleman makes an important point about the credit situation in Northern Ireland, and I know that the hon. Member for East Antrim (Sammy Wilson) pays close attention to it. We need to ensure that banks are sufficiently well capitalised to enable them to lend to businesses. One of the things that the hon. Gentleman may have noticed from last week’s report from the European Banking Authority is that no UK banks required additional capital, because they are already well capitalised and should be in a position to lend, as was demonstrated by the third quarter Project Merlin figures.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

This report is a damning indictment of the decisions taken by the previous Government, so it is regrettable that the shadow Chancellor could not be here to apologise in person to the House and to the country. Does the Minister agree that the something-for-nothing culture allowed to fester under the previous Government is something that this Government will not allow and that they will examine how to shift the dynamic in boards in systemically important businesses so that non-execs are able to challenge powerful CEOs and hold them to account?

[Mr Hoban]

My hon. Friend makes an important point, because there was a culture, as documented in the report, that meant that directors on the board of RBS did not challenge the CEO sufficiently robustly. That needs to change. We also need to ensure that the incentive arrangements for directors are robust. Under the previous regime, bonuses could be paid out in cash straight away. Over the past couple of years, tougher rules have been put in place to defer bonuses, to make sure that they are paid in shares and to claw back bonuses where there has been failure. That is a tough regime in place and it should make sure that the incentives of directors are in line with those of shareholders.