Examination of Witnesses (Questions 80-95)
SIR DAVID
COOKSEY, MR
JOHN KINGMAN,
MR KEITH
MORGAN AND
MR JOHN
CROMPTON
4 NOVEMBER 2009
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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