Delayed report into HBOS collapse set to heap criticism on former bosses

Published: Thursday 19th November 2015 by The News Editor

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A much-delayed report into what went wrong in the run up to the collapse of HBOS will be published today, once more heaping severe criticism on its former bosses and putting pressure on regulators for their handling of the inquiry.

But reports suggest it is now too late to fine any former executives deemed responsible for the lender’s demise and subsequent taxpayer bailout, leaving authorities powerless to levy penalties.

The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) will publish the 500-page report, which has been delayed by more than a year due to lengthy legal wrangling, with a separate 100-page document due alongside it by Andrew Green QC looking at why only one former HBOS executive, Peter Cummings, was formally investigated and fined.

It is thought that regulators may look to ban ex-HBOS chief executives Andy Hornby and James Crosby, as well as past chairman Lord Stevenson, from working in financial services – the only sanction available as fines are no longer seen as possible, because the report has taken more than six years to produce.

P ast City watchdog, the Financial Services Authority (FSA), is also likely to come under harsh criticism for its supervision of the bank in the lead-up to its failure.

Auditors KPMG may also come under fire amid speculation the report will reveal HBOS directors leant on the firm to sign off lower bad loan write-offs in 2008 to ease concerns about its finances.

This could see former KPMG chairman John Griffith-Jones come under fresh scrutiny, given his current role chairing the FCA.

HBOS, which was formed from the merger of Halifax and Bank of Scotland in 2001, expanded too rapidly and lent recklessly before the credit crunch and financial crisis struck.

It agreed to a rescue takeover by Lloyds in September 2008, but the enlarged bank needed a £20.5 billion taxpayer bailout just weeks later.

A damning report by the Parliamentary Commission on Banking Standards in April 2013 accused t he trio of bankers who ran HBOS in the run-up to its dramatic collapse of a “colossal failure of management”.

Their ”toxic” misjudgments led to the bank’s downfall at the height of the financial crisis , the influential commission of MPs and peers found.

Mr Crosby was stripped of his knighthood at his own request following the report, which said he was the “architect of the strategy that set the course for disaster”.

He also gave up 30% of his £580,000-a-year pension and stood down from roles at catering giant Compass and private equity firm Bridgepoint.

But Mr Cummings – who ran the commercial arm at HBOS – is the only former director at the bank to have been penalised by the FSA, after being fined £500,000 and banned for life from working in the City.

Mr Hornby is now chief operating officer of Gala Coral – which is being taken over by rival Ladbrokes to create a £2.3 billion gambling giant – which has been supportive of him and is once again expected to back its senior executive after the latest report.

Published: Thursday 19th November 2015 by The News Editor

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