Treasury Contents

Examination of Witnesses (Questions 80-95)



  Q80  Mr Todd: Have you followed the Walker draft recommendations on shareholder engagement?

  Mr Kingman: Yes.

  Q81  Mr Todd: Those obviously place significantly greater onus on major shareholders in both of these institutions.

  Mr Kingman: We see this as completely central to what we are here for. Quite apart from what is just generally good practice and desirable, we have this enormous pile of shares to sell to other investors over time and therefore we need to have really good relationships both with current investors and also with potential investors in our banks. We need to understand what they think. John and his colleagues have held more than 80 meetings with other shareholders precisely to do this.

  Q82  Mr Todd: Yesterday when we had a witness in front of us, Sir David, I put to him a suggestion that shareholders should be directly engaged with the risk governance model of the institution. Would you agree with that and is that something you are already utilising?

  Mr Kingman: If I understand the suggestion correctly, I think it is an astonishing thing that shareholders generally took so little interest in risk.

  Q83  Mr Todd: I am not just talking about interest; I am talking about active engagement.

  Mr Kingman: That is precisely what we would wish to see.

  Q84  Ms Keeble: We have the Women in the City report as well. I wanted to ask in particular whether under your investment mandate, clauses 8(1) and 8(2), you have given any thought or direction towards ensuring that there is gender diversity on the boards of the banks.

  Mr Kingman: This is something that we think is important. Frankly, I do not think that what we have is good enough, by which I mean that if you look at the boards of the banks in which we are invested they are incredibly male. I think we can do something about that. We recently worked closely with RBS on the appointment of Penny Hughes to the board of RBS, who is an absolutely outstanding candidate there. She is going to chair the remuneration committee. The key to this is finding the really good, qualified people. We are very actively interested in identifying outstanding female director candidates to go on the boards of our banks.

  Q85  Ms Keeble: People say, "We do not appoint women because we cannot find them", but there is a very large list of women who are available for appointment. I wondered what active steps you had taken to look through the list of women who are in positions, to see what can be done for example to ensure that job descriptions reflect the actual requirements of the job, not just the job as it has always been done, which has not been very well.

  Mr Kingman: I agree completely. I certainly would not accept for a second that you cannot find good female candidates. We just have in the form of Penny on the RBS board. Helen Weir is a very strong head of retail at Lloyds Banking Group. The point remains that if you step back and look across the boards of our investing banks they remain incredibly male and we would very much like to be part of changing that.

  Q86  Ms Keeble: You said that 14 directors had left from RBS, the Lloyds chair and five. Have all those people been replaced? That would make 20.

  Mr Kingman: No.

  Q87  Ms Keeble: What percentage of the appointments you have made have been women?

  Mr Kingman: The reason they have not all been replaced and one of the things that I think went wrong with these boards is that they were far too big. The boards are significantly smaller. Certainly the sense we get is that the quality of discussion on these boards is—

  Q88  Ms Keeble: How many replacements?

  Mr Kingman: We have appointed one woman out of the appointments. We have rights over five appointments, so one in five. Am I saying that is perfect? No. Definitely not.

  Q89  Ms Keeble: There are two issues, are there not? One is dealing with the vacancies as they come up and the other is under these clauses that you have here in your mandate, saying you have to think about the way in which the boards are structured and you have to give some thinking to the kind of people you want, the kind of skills you want. That is where you can sometimes make some dramatic changes. Have you given thought under 8(1) and 8(2) to giving some strategic direction to the banks about how they might look at getting more diversity into their boards?

  Mr Kingman: I do not think we need to be told in our investment mandate to do it, frankly. It is obvious that we need to do it. Yes, certainly all of the discussions we have had with the chairs of our banks about the kind of people they should have on their boards have included that we would like to see more women on board.

  Q90  Ms Keeble: Have you looked at HSBC, which seems to have the most diverse board and is quite open about the way it discusses it, and the relationship with having a more diverse board and the operation of the board in the success of the company?

  Mr Kingman: I am familiar with the HSBC board, yes.

  Q91  Ms Keeble: David Walker yesterday had some very interesting remarks to make to us about the need for internal challenge in a board. There was therefore discussion about the relationship between that and having a more diverse board where people can challenge. Do you feel that it would be important to get more challenge in the boards, to have more women there?

  Mr Kingman: I would hope so. I am not going to back the appointment of any non-executive director to any bank board if I am not convinced when I meet them that they can provide that challenging role. I do not know whether I am ready to say that women will necessarily be more challenging than men but I do think diversity helps challenge.

  Q92  Ms Keeble: Sir David, do you agree with the remarks? What do you think about this subject area?

  Sir David Cooksey: I certainly agree with the remarks. On our own board we have two women out of seven. I would like it to be more. Indeed, in seeking John's replacement as chief executive, we went absolutely out of our way to search for women for that role but unfortunately—and I do not know why—there was extremely little interest amongst women about becoming chief executive of UKFI.

  Q93  Ms Keeble: Would you accept also that sometimes you have to look at what you are asking for as well? There might have been some very substantial mistakes in having a whole lot of men off the old boy's network who were appointed to companies and then took some very bad decisions, partly because they were of the old boys' network. It is partly an issue of what you ask for.

  Sir David Cooksey: I am involved in various organisations, which you will have seen. We have tried extremely hard to achieve much better gender balance. In most of them we have achieved that. Can I just assure you that I am absolutely with you and will do my best to broaden the base.

  Q94  Chairman: Were you a role model gone wrong, John?

  Mr Kingman: I am not setting myself up as any sort of role model.

  Q95  Chairman: We have had quite a lot of complaints about treatment by the banks, particularly the nationalised and part nationalised banks. For example, HBOS and Lloyds putting on overdraft charges. I have one in front of me saying they are getting charged an extra pound a day and someone is saying that has gone to 2000%. There seems to be an insensitivity there. From businesses I am speaking to about HBOS, Lloyds and RBS they are saying that the renewal charges and hidden charges have gone right up. I think that is an issue for consumers because there is a level of discontent out there. I think it is important that we mention that to you so that you can chat to others. It is not your direct responsibility but I think you should know about it.

  Mr Kingman: I agree with you completely. I think the reason it is relevant to us is not because we are some sort of regulator. We are not a regulator. We are here to act on behalf of the public and the public have a legitimate expectation that when they have bailed out these banks they should treat their customers properly and fairly.

  Chairman: Can I thank you for your attendance? Mr Kingman, you have been coming to this Committee for a decade. You are now released officially. Can we wish your well in your new venture? Thank you for the cooperation that you have given to us in the past.

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Prepared 27 November 2009