Royal Bank of Scotland's management failed to spot the manipulation of benchmark interest rates by traders because they were focused on keeping the bank alive, the head of its investment bank told British lawmakers.
"When we took control of the bank it had had a cardiac arrest. We had to prioritise dealing with the existential threat to the bank," John Hourican, who is leaving RBS in the wake of the Libor interest rate scandal, told an influential lawmakers panel.
Appearing before the Parliamentary Commission on Banking Standards on Monday, Hourican said it was important that the bank learnt its lessons from the affair.
"I have told people who are prepared to listen that they shouldn't waste my death," he said.
Peter Nielsen, head of RBS's markets division, said the bank was unlikely to have made money out of the manipulation, though he admitted it was too slow to respond to the wrongdoing. He said he had discussed resigning with Hourican in the wake of the affair, but decided to stay on.
Hourican said he had told Chief Executive Stephen Hester that Nielsen should stay, arguing: "The bank is better served by Peter remaining at RBS".
The Parliamentary Commission on Banking Standards also interviewed Johnny Cameron, who ran RBS's investment bank under disgraced former Chief Executive Fred Goodwin.
Cameron said the bank had attempted to impose ethical values on its traders but couldn't control their behavior.
"You can't impose moral standards on those that don't wish to be moral," he said, adding Libor manipulation had not been seen as a potential danger for banks.
"It just didn't occur to anyone that this was a rate that could be fiddled," he said.
RBS agreed to pay $612 million to U.S. and British authorities last Wednesday to settle allegations it manipulated benchmark interest rates.
More than a dozen banks and brokerages, including JP Morgan Chase & Co, Deutsche Bank AG and Citigroup Inc, are being investigated by regulators over the manipulation of benchmark interest rates such as the London interbank offered rate, known as Libor, and Euribor, which have been used to price trillions of dollars' worth of loans.