Yahoo Finance Anthony Hilton: Lloyds and RBS struggle to do what’s right
It is no real surprise if there should be a last-minute settlement of the legal action brought against Royal Bank of Scotland by shareholders who felt that they were not told the whole truth during the financial crisis when the bank asked them to put up more capital. Former chief executive Fred Goodwin is just one of several witnesses whose testimony might well highlight issues that the bank would rather keep buried.
The real question is why it has to be so last minute. If the case could be settled today it could have been settled six months or a year ago, saved some of the vast legal costs, and prevented a huge amount of time-wasting.
Yet that is the way institutions behave. The present team running RBS have no connection with the past and indeed have gone to great lengths to disown it, but nevertheless spend tens of millions of the bank’s money fighting against people who were its obvious victims.
They bleat on about how they have mended their ways, and it is time for everyone to trust them again. But every time they are faced with a choice between doing what they can legally get away with or doing the right thing, they take the morally ambivalent route. They still cannot help behaving like second-hand car salesman.
Lloyds is as bad. It should hang its head in shame at the way it sought to cover up the fraud in its Reading Branch, refused to co-operate with the police and only admitted its mistake after this year’s lengthy trial when its staff were found guilty. Yet even now it is dragging its feet over the payment of compensation to the victims.
Next up, Lloyds is also doggedly defending a legal action being brought by shareholders who — in a way similar to RBS — felt they were not told the whole truth when they were asked to approve the purchase of HBOS.
The case is scheduled to come to court this autumn but instead of showing some sign of contrition or perhaps a twinge of sympathy for the generation of shareholders wiped out by its previous management’s disastrous decision, the present Lloyds board is trying instead to bleed them dry. To do this it is using the shoddiest tactic in the lawyer’s book — demanding that the plaintiffs provide cover for its legal costs, while trying to make these costs as high possible.
This is an organisation which also says it is trying to rebuild its reputation and has mended its ways, and it does make one wonder what the point is of non-executive directors who allow this kind of legal action to head towards the courts without any seeming regard for the risks to what is left of the bank’s reputation.
Don’t blame its public relations advisers though. The head of the internal team and the external consultants were all fired earlier this year after they failed to keep reports of chief executive Antonio Horta-Osorio’s private life out of the papers.
Interesting priorities.
