"It's just amazing how Libor fixing can make you that much money," declared one Royal Bank of Scotland trader in 2007. It's also amazing how long senior management at RBS took to fix the bank's Libor controls once the rotten stench emerged.
The most damning judgment in the Financial Services Authority's report reads: "In March 2011, RBS attested to the FSA that its systems and controls were adequate. The attestation was inaccurate." Indeed, it was March 2012 before RBS twigged that Libor submitters and derivatives traders should not have their bonuses linked in any way.
That failure is one reason why RBS has been hit with a bigger fine than Barclays' £290m, even though the abuses themselves don't seem quite so outrageous. In RBS's case, for example, there was no attempt to low-ball Libor submissions during the height of the financial crisis and no senior executive was implicated. As for the bravado-filled email exchanges between traders, they seem on a par: Barclays' miscreants dealt in bottles of Bollinger; the taste at RBS was for steak and sushi.
But in terms of response, RBS was painfully slow. As late as November 2010, employees were laughing about "the BBA thing", referring to RBS's internal investigation, and carrying on their old practices, albeit trying to avoid instant messages on their Bloomberg terminals.
A deputy's head must roll, RBS has concluded. John Hourican, head of the investment bank, had no direct involvement, but he can hardly count himself unfortunate to be asked to leave: when you're earning a salary of £750,000 to lead a large investment bank, you're a big boss and are expected to accept accountability.
Why no boardroom resignation? Stephen Hester, chief executive since November 2008, sounded miffed to be asked. He serves at the pleasure of those who appointed him, he explained, and will carry on until that situation changes. And his bosses clearly are happy. Chancellor George Osborne, Lord Turner at the FSA and Andrew Bailey, who will be head of the Bank of England's new Prudential Regulation Authority, were consulted.
Satisfactory? More like understandable and pragmatic. The slowness in fixing RBS's inadequate controls is a clear failure, but Hester's overall record at the bank is much better. On balance, this was not a resigning matter for Hester.
Less understandable is chairman Sir Philip Hampton's strong defence of his boardroom audit and risk committees, the latter established in late 2009, when the former was split in two. In theory, the non-executive directors who serve on these committees are meant to act as a safeguard of proper conduct – think of them as watchdogs who should hold the executive to account. In practice, they tend to be invisible when scandal erupts.
The banking standards commission, under Andrew Tyrie's chairmanship, should not confine its list of witnesses to Hampton and Hester. Summon a few RBS non-executives, Mr Tyrie, and let's see if, and when, they were asking tough questions about the bank's Libor clean-up.
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