LONDON (Reuters) - The bosses of two of the lenders who will be most affected by changes to rules governing British banks will appear before Parliament’s ongoing investigation into standards next week.
Antonio Horta-Osorio and Stephen Hester, the chief executives of state-backed Lloyds (LLOY.L) and Royal Bank of Scotland (RBS.L) respectively, will appear before the Parliamentary Commission on Banking Standards on Tuesday, along with Standard Chartered (STAN.L) CEO Peter Sands.
The commission was set up after the government came under pressure to scrutinize banks more effectively in the wake of Barclays (BARC.L) being fined 290 million pounds for manipulating Libor interest rates, one of a number of scandals which have rocked the industry.
It is led by Conservative MP Andrew Tyrie and includes former Chancellor Nigel Lawson and the next Archbishop of Canterbury, Justin Welby.
Hester and Horta-Osorio are likely to face questions about sales practices at their banks, having set aside billions to compensate customers wrongly sold loan insurance. The mis-selling of interest rate-hedging products to small companies will likely also be on the agenda.
They could also be quizzed on prospects for the government selling its stakes in the banks. Taxpayers are sitting on losses of 21 billion pounds on RBS and 6 billion on Lloyds after Britain pumped in 45 billion and 20 billion respectively to rescue them during the 2008 financial crisis.
RBS said earlier this month it was likely to be fined for its part in the global interest rate rigging scandal and wanted to reach a settlement as soon as possible. The bank is also being investigated over possible breaches of sanctions on Iran.
The Commission will also take evidence from John Vickers, the Oxford University academic who led a 15-month review of the banking industry that formed the basis of proposals for banks to ringfence their domestic retail operations from riskier investment banking operations.
The inquiry begins and ends the week with evidence from several former executives of HBOS, the mortgage bank that almost collapsed in 2008 and was taken over by Lloyds. Tyrie has set up a sub-committee to investigate HBOS’s downfall and has, for the first time in a public evidence gathering session, appointed legal counsel to cross-examine witnesses.
Reporting by Matt Scuffham; Editing by Mike Nesbit