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November 14, 2012

Archbishop of Canterbury-Elect Justin Welby was Wrong to Attack RBS Boss Stephen Hester

By Spear's

The clash between Justin Welby and Stephen Hester was inconclusive for a very simple reason: Hester couldn’t answer Welby’s questions because they are not the kind of questions with which a bank is, or should be, concerned

Meetings of parliamentary commissions are probably rarely described as colourful — but yesterday’s was different, containing as it did a spat between a priest and a banker.

Stephen Hester, boss of the Royal Bank of Scotland, came under fire from Justin Welby, incoming Archbishop of Canterbury, for failing to explaining his bank’s ‘duty to society’. The exchange was inconclusive for a very simple reason: Hester couldn’t answer Welby’s questions because they are not the kind of questions with which a bank is concerned.

Welby wanted to know why Hester had not made any public announcements regarding state-backed RBS’s moral responsibility to society: ‘What is the duty of an enormous bank like yours, approaching 100 per cent of GDP, well into the hundreds of billions of pounds, what is your duty to society, and why didn’t you mention it?’ he said.

Hester seemed slightly flummoxed by this question but gave a pretty good response — although he probably should have been better prepared for a priest being more interested in morals than figures. He argued that a bank acts as a ‘positive contributor to society…through direct operations, so by doing a good job for customers, by servicing savers and so on, through shareholders, by employing people responsibly, by paying taxes’.

Archbishop of Canterbury-elect Justin Welby previously worked in the oil industry

Before feeling a ‘call’ to the priesthood in 1987, Welby worked for French oil company Elf Aquitaine and later became treasurer for Enterprise Oil, so you’d think he’d understand that banks are businesses concerned with making money rather than charities fuelled by social purpose. Not so: he was singularly unsatisfied with Hester’s response, demanding a more ‘penetrating analysis of what your duty is to society — other than just obeying the law and paying taxes’.

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Hester didn’t provide one because he’d already defined the role of banks, and made clear he didn’t think they had a ‘duty to society’ beyond fulfilling that role. He admitted RBS and other banks had made mistakes in the credit crunch — adding that ‘banks didn’t deliberately make themselves unsafe’ — but in any case, this was not the issue under discussion. Welby will remain unsatisfied if he expects the financial sector to fulfill a role it has no responsibility to.
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