Politicians making Hester [...]]]> Stephen Hester, the chief executive of the Royal Bank of Scotland, is the perfect example of a rich man that is obsessed with getting even richer and has helped to smear the image of the upper crust for most people this week as news of his absurd bonus broke this week amidst controversy.

Politicians making Hester the focus of their rants this week have not helped matters either as most people by now have had enough time to think about the banking bonus season and start to wonder why they even need a bonus when they earn much more than most regular workers to start with. However, outside of making snide comments and increasing taxes there is little that the politicians can do to actually prevent bankers from living their privileged lives.

Of course, in this instance, Hester works for the RBS which received a £45 bailout meaning that the public owns approximately 83% of the bank. In this case, if David Cameron wants to put it in the spotlight and try to make an example of the situation, he has every right to do so. On the other hand, when Hester took the lead position three years ago he did known what he was in for.

He is already rich so it was not about the money, and knowing that the Government would be watching every move you make is not an easy spot to find one’s self in anyhow. However, it was not Hester’s fault that the bank collapsed; instead he is just the guy that was in charge of cleaning up the mess after it happened.

Despite this fact, with so many negative sentiments swirling around about his bonus he is being turned into the representative for banking evil and before long the general public will be thinking he is the sole cause of the 2008 banking crisis. Hester is not in an easy position because he has to please three groups of people; taxpayers, customers, and shareholders and many of these people cross groups.

There really is no winning solution that will make everyone happy because if he tightens lending criteria it could help with the banking profits, but would be very anti-community to deny loans to people who truly need them. On the other hand, he cannot get away with paying investment bankers less if he wants to continue to attract the best bankers in the business  to help increase the profits that come out of the bank.

Perhaps it is better to put aside one’s own opinion on what Hester should or should not do and remember what a mess RBS was when Sir Fred Goodwin left it. In fact, the balance sheet was out of control, but in just three short years Hester has been able to shrink the bank debt sheet by about £600 billion, which is no a small feat, and he is working on more transactions to get rid of acquisitions that the RSB had no business investing in, including insurance and its casino banking methods.

The FSA (Financial Services Authority) stated that the RBS failed to properly screen transactions and customers throughout 2008, which created the risk that [...]]]> The Royal Bank of Scotland has been fined 5.6m pounds for failing to follow regulations that prevent banks from lending to unsafe individuals that belong on government ban lists such as terrorist organizations.

The FSA (Financial Services Authority) stated that the RBS failed to properly screen transactions and customers throughout 2008, which created the risk that they may have issued loans to sanctions targets and terrorist groups.

Although no such incidents were indicated by the investigation, given the large degree of risk the bank was fined for allowing such an opportunity to occur.

FSA director of enforcement and financial crime, Margaret Cole, stated that a UK financial institution that makes it possible to fund or offer any type of financial or economic resources to those on a sanctions list undermines the safety and credibility of the financial services sector in the UK.

The large fine amount is the first penalty that has been handed out by the FSA after the 2007 Money Laundering Regulations came into effect and is meant to serve as a clear warning to other banking institutions that the regulations need to be supported by proper lending screening procedures.

The RBS was able to reduce the fine by 30% because they settled early into the investigation by the FSA and stated that they have already taken steps to correct the unfortunate situation.

Head of risk at RBS, Nathan Bostock, stated that the investigation brought to the RSB’s attention that there were some deficiencies in their policies and controls that will be fixed.