RBS banker John Hourican is 'fall guy' for Libor scandal
Is the RBS investment chief being 'sacrificed' to quell public anger over the bank's massive fines?
JOHN HOURICAN, the senior RBS executive who is stepping down with a minimum pay-out in the wake of the Libor rate-rigging scandal, is a "sacrificial offering" designed to appease public anger over the massive fines the bank has incurred, sources in the banking sector say.
Friends of RBS’s chief executive of markets and international banking, told the Daily Telegraph that Hourican was not in charge of the bank’s investment arm for much of the time the Libor rate-rigging scandal was going on and had no knowledge, direct or indirect, of the fraudulent activity. They said the Irish banker was a "sacrificial offering" because the chancellor George Osborne wanted to quell public anger after the bank – which is 83 per cent owned by the government – said it would pay fines of more than £400m in relation to the Libor scandal.
"George Osborne has played the part of a school room bully which will hurt the taxpayer in the end," one source at the bank told the Telegraph. "John slaved every day for this company. He is taking the fall. But he will leave with his head held high."
The BBC describes Hourican, who earned £3.5m last year, as "the most high profile casualty" at the bank since details of the Libor scandal emerged. He will be stripped of his 2012 bonus and a further £4m in bonus payments and share options from previous years to "help pay the expected fines".
Hourican will leave RBS with a £700,000 pay-out, his minimum entitlement. But even this sum is "likely to generate criticism", The Times says, because there will be a perception that he is "being rewarded for failure". There is speculation the government may try to "claw back" the payment with one Whitehall source telling the paper, "we may go after it".
The Daily Mail agrees that Hourican’s departure at the end of the month is primarily "an attempt to satisfy demand from politicians and regulators for a senior scalp". It says "there is no evidence" Hourican knew about the Libor scandal, but points out he is a "controversial figure" at the bank because he "presided over thousands of jobs cuts as he wound down the investment arm". More cuts to the division are expected even though it is now half its original size.
RBS will become the third bank to admit attempting to fix the interbank lending rate, after Barclays was fined last summer and UBS in December.