'Shocking' Nature Of UK Bankster Transgressions

By Mark Kleinman: It was nearly three years ago that Bob Diamond, the then chief executive of Barclays, said the period of remorse for British bankers needed to be over.

This week’s events underline just how premature Mr Diamond’s statement was.
Fines totalling £90m for Britain's two state-backed lenders, Lloyds Banking Group and Royal Bank of Scotland (RBS), were modest in the context of some of the penalties handed out to banks since the crisis of 2008.
The nature of the transgressions, though, was arguably as shocking as anything seen in global banking during the last five years.
Lloyds - predominantly a retail bank which has escaped associations with the more egregious behaviour of its investment banking peers - was exposed for running bonus schemes which include a 'Grand in your Hand' for star salespeople.
The 'champagne bonus' was another initiative aimed at those who met tough sales targets.
Bankers were drinking to their customers’ naivete for years: in total, nearly 700,000 of them were affected by the mis-selling bonanza to which Lloyds staff toasted.

But perhaps most appalling of all was the City watchdog’s reference to a Lloyds employee who sold products to his wife and himself in order to avoid the prospect of demotion.
With incentive structures such as these, it is easy to see why such inappropriate sales practices were inevitable.
A £28m fine, while a record for retail misconduct from the UK financial regulator, struck observers such as the former Labour City Minister, Lord Myners, as inadequate.
At RBS, the experience of being hit with regulatory fines has become depressingly familiar.
The £62m charge it had already absorbed for breaching US sanctions laws added the transgression to a list of payouts for rate-rigging, swap mis-selling and money-laundering rule abuses.
Another hefty fine for the failure of its IT systems in 2011 is likely in the months ahead.
Ross McEwan, the bank’s new chief executive, must wonder whether the reparation of RBS’s reputation is achievable during his tenure.
Both Lloyds and RBS expressed appropriate levels of contrition on Wednesday: words such as 'regret', 'oversight' and 'flawed' peppered their press releases as they sought to demonstrate that they understand the level of public and political anger at their behaviour.
Their statements do not, however, disguise the glaring fact that Mr Diamond was wrong. The period of remorse for the UK's big banks will not need to be over for some years to come.

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