The four men who led two of Britain's biggest banks to the brink of collapse apologised to the nation today before defending their actions during a lengthy grilling by a panel of MPs investigating the origins of the banking crisis.

Appearing before the Treasury Select Committee were Sir Fred 'the Shred' Goodwin, the former chief executive of RBS, his former chairman Sir Tom McKillop, and Andy Hornby and Lord Stevenson of Coddenham, respectively the former CEO and chairman of HBOS.

A hearing which lasted more than three hours began with a cathartic and ritualistic apology by all four men, presided over with evident relish by John McFall, the hard-hitting chairman of the committee.

“We are profoundly and, I think I would say, unreservedly sorry at the turn of events," said the urbane Lord Stevenson. “All of us have lost a great deal of money, including of course a great number of our colleagues, and we are very sorry for that.

“There has been huge anxiety and uncertainty caused for our colleagues but also, for periods of time, for our customers. And I would also say we are sorry at the effect it has had on the communities we serve.”

But with voters and pundits baying for blood, the bankers were not allowed to get away with a mere apology. As the committee met, an online petition launched yesterday by the former deputy prime minister John Prescott, demanding that all RBS bonuses be stopped, received its 10,000th signature.

Mr McFall pressured his witnesses into accepting that they had failed to live up to the accepted definition of a bank, as given by the Oxford English Dictionary: "An organisation offering financial services, especially the safekeeping of customers' money until required and making loans at interest."

RBS is now 68 per cent owned by the State and has been propped up with £20 billion of public money. HBOS has been entirely swallowed by Lloyds TSB in the newly-formed Lloyds Banking Group after the lender fell victim to the financial crisis.

Altogether RBS, HBOS and merger partner Lloyds were supported with £37 million in taxpayers’ cash last autumn as the financial system came close to collapse and the Treasury pushed through what was described by Sir Fred at the time as a "drive-by shooting".

Despite their apologies, however, all four men defended their actions robustly. Their common argument was that even after the onset of the credit crunch, no-one could reasonably have been expected to predict the scale and speed of the collapse of confidence in wholesale credit markets, especially before the sudden collapse of the US investment bank Lehman Bros last September.

Sir Fred and Sir Tom were closely quetioned over their decision in late 2007 to mount a bid for the Dutch bank ABN Amro, a deal which Sir Tom admitted had cost RBS billions of pounds. "In retrospect, we bought ABN Amro at the top of the market," he told the committee. "Everything we paid basically has not been worth it."

But Sir Fred denied that RBS had ignored warnings from the Bank of England and the Financial Services Authority, insisting that nobody had anticipated the scale of the crisis.

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