Hester says Libor scandal is the last gasp of old banking culture

Ben Southwood
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RBS CHIEF executive Stephen Hester yesterday called his bank the “poster child for what went wrong in banking,” due to its leveraged balance sheet and the bailout it needed when the financial crisis hit home.

But Hester said that the “era of over-reach” was coming to an end, and the scandals surrounding Libor and PPI mis-selling were its “last vestiges”.

In a public speech at the London School of Economics, Hester said RBS had increased its capital ratios from four per cent to 10 per cent, and reduced the size of its balance sheet by £700bn, to the point where deposits are equal to lending – what he called “the gold standard of banking”.

But Hester accepted that this restructuring, though in line with the emphasis on customer service, could see profits taking a back seat.