None of the former heads of HBOS and RBS were going to walk into the Treasury select committee and say: “Je ne regrette rien.”

And yes, they are all “profoundly and unreservedly sorry”, they said this morning. (There was a full-on carnival atmosphere in and around Portcullis House, with union protesters, police and hundreds of journalists and photographers).

But would they have done anything differently? That’s the question. And the answer seemed to be: no.

They pointed out that kept their bonuses in shares which are now worth a fraction of their previous value. So they, too, have lost out.

And they have defended their policies: “We haven’t thought our business was predicated that everything would go up forever, but that things could turn as quickly as they did, I don’t think anyone expected that,” said Sir Fred Goodwin, former ceo of RBS.

The world had simply changed too rapidly for the worst.

Asked whether RBS paid too much for ABN Amro - and if so by what margin - Sir Tom McKillop, former chair of RBS, replied: “Everything we paid has not been worth it. I could say 50 per cent, but what difference would that make?”

Had the ABN deal been a failure, asked Michael Fallon, deputy chair of the committee?

“We did make a bad mistake in acquiring ABN Amro….it is easy in retrospect (to say that)”, said Sir Tom - saying that there was “lots of evidence” at the time suggesting it was a good deal. Plus it had support from 94 per cent of shareholders.

(I recall widespread scepticism about the terms of the deal at the time; it was widely seen as an attempt to scupper Barclays…in fact John McFall, chair of the committee, has just pointed out that the deal completed one month after the collapse of Northern Rock, when it was very clear that banking was in a crisis).

Lord Stevenson, former chair of HBOS, has just insisted that the bank had strong risk controls, which the FSA was happy with: “There would be very few board meetings where risk wasn’t considered with the risk director present briefing the board.“

So what did go wrong: external factors.

“We failed to consider some of the external scenarios that happened.”

Now for Sir Fred Goodwin, former ceo of RBS:

Asked whether his pension should be linked to the share price performance of the bank - down from about 550p to about 20p - Sir Fred thinks most definitely not. “No, because pension schemes are not generally allowed to invest in the company that is providing it.”

And he has been punished because he has lost about £5m in RBS shares. (cue sound of violin).

So too has Andy Hornby, former chief exec of HBOS: “I have invested ever single penny of my bonuses in HBOS shares..I have lost considerably more money in the last two years…than I have earned”.

Later he added: “I don’t feel I’m particularly personally culpable.”

Meanwhile, they all say, their boards are stuffed with hundreds of years of financial experience; even if McKillop used to work at a pharmaceutical group and Hornby made his name at Asda.

McFall has just asked the million dollar question: “What are you all apologising for? Are you expressing sympathy because your PR advisers advised you to do so?”

Or as another MP (11.28am) just asked Lord Stevenson, who blamed the downfall of HBOS on the freeze in wholesale markets: “What is the point in apologising if (you believe) you got it roughly right?”

UPDATE:

The written memorandum from Lord Stevenson and Hornby has just been published by the Treasury select committee. The pair are “profoundly sorry..about what has happened at HBOS”.

But was it their fault? Of course not.

“HBOS had performed well in relation to its competitors on a range of financial and non-financial indicators since its foundation in 2001….We entered this phase in August 2007 with capital ratios that satisfied the FSA’s criteria….”

“Why then did HBOs encouter such huge difficulties? The summary answer is the liquidity pressures that HBOS experienced as a result of the first failure in wholesale markets for over 70 years….unprecedented global circumstances…etc”

February 10, 2009 11:32am in Banks, UK politics | Comment