Bank bosses who wrecked HBOS blasted in official report

Three City fatcats responsible for the HBOS bank crash that cost the taxpayer 20billion ar

e savaged in a damning dossier released today. The Banking Commission laid the blame firmly on the ill-fated bank’s e

x-chairman Lord Stevenson and former chief executives Sir James Crosby and Andy Hornby. The commission – set up to examine the industry’s practices after the world financial crisis broke – branded the HBOS disas2020第69真每期正版四不像图 ter “a traditional bank failure, pure and simple

” and “a manual for bad banking”. The trio raked in millions for themselves from their lofty positions while steering HBOS on to the financial rocks. Lord Stevenson earned about 815,000 a year in pay and perks after leading the Halifax into its 2001 merger with the Bank of Scotland until its near-collapse in 2008. Crosby netted an estimated 8million before stepping down in mid-2006, while Hornby started with HBOS on 300,000 a year in 1999 and earned 1.9million in salary and benefits in his last year, 2009. It took a 20.5billion taxpayers’ bail-out and merger with Lloyds, forced through by the Government, to keep HBOS afloat. But the judgement said that even now, after others intervened to save the sinking ship, the bosses remain apparently oblivious to their part in the crisis. The commission slated HBOS’s leadership for a management structure that was a “model of self-delusion”, a board strategy that “sowed the seeds of destru

ction” and also a “brash” culture underpinned by an arrogance that they were capable of doing things other banks weren’t. Andrew Tyrie, the chairman of the commission, said: “This is proportionately the

biggest failure of a mainstream bank in the UK in recent times, possibly ever. The HBOS story is one of catastrophic failures of management, governance and regulatory oversight. The sums would never have added up.” The report branded the top HBOS chiefs “incapable of even understanding the risks that some elements of the business were running, let alone managing them”. Cross-bench peer Lord Stevenson is said by critics to have got off lightly compared with other bank bosses who sank. Fred “The Shred” Goodwin was stripped of his knighthood for his role as boss in the Royal Bank of Scotland’s collapse. Lord Stevenson: Former chairman of HBOS (Image: PA) Yet Stevenson has remained at the heart of the Establishment, still sitting in the House of Lords. Last night, however, he faced calls to step down. Labour MP John Mann, of the Treasury select committee, said: “No bankers should be in the House of Lords after the way they took reckless gambles with the economy and cost so many people their jobs. Lord Stevenson definitely shouldn’t be there.” As early as 2002 the Financial Services Authority tested the level of risk at HBOS and warned it needed to “strengthen its control infrastructure”. In 2006 it said “the HBOS growth strategy posed risks that must be managed and mitigated”. Today’s commission report blasted: “The weaknesses of group risk in HBOS were a matter of design, not accident. “Primary responsibility for the downfall of HBOS should rest with Sir James Crosby, architect of the strategy that set the course for disaster, with Andy Hornby, who proved unable or unwilling to change course, and Lord Stevenson, who presided over the bank’s board

from its birth to its death. “Lord Stevenson, in particular, has shown himself incapable of facing the realities of what placed the bank in jeopardy from that time until now. “We are shocked and surprised that, even after the ship ran aground, so many of those who were on the bridge still seem so keen t

o congratulate themselves on their collective navigational skills.” The panel, which heard evidence from the former regime, said any apologies now were “hollow”. It was “very disappointed by the attempts of those who led HBOS into the abyss” to acknowledge even now the problems that consumed it or even their own responsibility in the collapse. The commission added: “An apology is due for the board’s incompetent, reckless strategy. Just apologising for having failed to plan for an unforeseeable event is not much of an apology.” Sir James Crosby was appointed FSA deputy chairman in 2006. Two years later HBOS’s ex-head of risk Paul Moore said he told the FSA in 2004 that the bank was out of control. Sir James resigned from the FSA in 2009, though he insisted that Mr Moore’s allegations had no merit. Andy Hornby: Former Chief Executive (Image: Reuters) The Banking Commission, set up by Parliament, will eventually report back to Downing Street to shape the future of banks. It said warning signs first appeared as early as 2004 when – even amid a world financial boom – HBOS could be seen as “an accident waiting to happen”. Warnings that its growth was running out of control were ignored. At its 2007 peak it was worth 40billion but when the global crisi


hit a year later HBOS was on the verge of going under. On April 18, 2008, Lord Stevenson said it was “in as secure a position as it could be”. Next day HBOS shares dived nearly 20%.  A Parliamentary committee accused the peer of being “dishonest” or “delusional”. By September the bank had to be rescued by Lloyds TSB and bailed out by the Government to the tune of 20.5billion. Without help, property loan losses would have wrecked the bank totally. So far, only former director

Peter Cummings has faced sanctions over HBOS’s failure. Last year he was fined 500,000 and banned from working in the City again. Lloyds has now repaid the Government billions used to keep HBOS solvent. Last night there was no sign of either Sir James at his gated, detached

home in Beckwithshaw, North Yorkshire, Andy Hornby at his cottage a few miles away near Boroughbridge or Lord Stevenson at his plush three-storey townhouse near the Palace of Westminster in Central London. Lloyds Banking Group said: “The report relates to HBOS plc in the years prior to its acquisition by the group. “We are continuing to focus our efforts on rebuilding.” REPORTS FINDINGS Andy Hornby JOB TITLE: Chief Executive, 2001 to 2009 REPORT SAYS: “Proved unable or unwilling to change course.” Mr Hornby became the youngest ever chief executive of a major bank at the age of 38. The retail whizz was only 32 when he w

as snapped up by the HBOS Group in 1999 and he was paid 300,000 despite having no banking experience. He celebrated his promotion to chief executive with coffee at a London cake shop before

watching a West End show with wife Cathy and their two children. Halifax’s s

inging assistant Howard was introduced during his tenure. The Oxford Graduate, who also studied for an MBA at Harvard University in the US, joined Asda under the tutelage of Conservative MP Archie Norman. He became retail managing director after just four years. He was born in Scarborough, North Yorkshire, but grew up at a Bristol preparatory school where his

father was headmaster. He still supports Bristol City,

even though his home is 230 miles away in Harrogate. He is now chief executive of bookmaker Coral and chairman of online pharmaceutical retailer Pharmacy2U. Sir James Crosby JOB TITLE: Chief Executive 1996 to 2006 REPORT SAYS: “Architect of the strategy that set the course for disaster. Yorkshireman Sir James, 56, is a Labour supporter who was knighted by Tony Blair in 2006. He started working for Halifax in 1994 and was the power behind the rise in the mortgage market and the merger with the Bank of Scotland. The new business, HBOS group, became the high street’s biggest mortgage lender. During his time as chief executive he was controversially appointed a director of the FSA by the Treasury. He left HBOS in 2006 after 10 years, naming Andy Hornby as his successor. Sir James continued to advise the Government and in 2008 he was appointed by Chancellor Alistair Darling to head up a group of mortgage industry experts. In the same year he was awarded an honorary degree by Bradford University for his “contribution to financial services”. The father of four daughters studied mathematics at Oxford and enjoys cricket and playing tennis. His pension from his stint as chief executive is believed to be worth 10million. Lord Stevenson JOB TITLE: Chairman REPORT SAYS: “Has shown himself incapable of facing the realities of what placed the bank in jeopardy from that time until now.” Lord Henry Dennistoun Stevenson, 68, joined Halifax in 1999 and left HBOS in January 2009 when it was taken over by Lloyds. He was renowned for making deals and he became chairman of various companies, sometimes more than one at a time. He was also chairman of Pearson from 1999-2005. He earned 815,000 a year in pay and perks but his tenure ended abruptly when HBOS collapsed and was bailed out by Lloyds. Lord Stevenson was born into a farming family in Scotland and read economics and sociology at Cambridge. He has four sons with wife Charlotte, the daughter of a former Lord Mayor of London, splitting his time between a 16th century farmhouse in Suffolk and a four-storey Georgian townhouse near Buckingham Palace. He became Baron Stevenson of Coddenham in 1999. He has battled depression and described his first bout as “worse than breaking my leg in 10 places”. He is still active in companies including Western Union. Financial Services Authority The report also blasted toothless watchdogs at the Financial Services Authority for failing to clamp down on the bank’s risky lending binge. It criticised the FSA’s weakness after it spotted some of the dangers in HBOS as far back as 2004. Instead of ordering the bank to clamp down on lending, the FSA farmed out a review to accountants KPMG, who were HBOS’s own auditor and then gave the all-clear. And a year after Sir James Crosby stepped down as chief executive of HBOS in 2006, he was made deputy chairman of the FSA and only quit the watchdog in January 2009. Banking Commission chairman Andrew Tyrie MP said: “From 2004 up until the latter part of 2007, the FSA was not so much the dog that didn’t bark as the dog barking up the wrong tree.” The failed FSA was scrapped on Monday and its work split between a new Financial Conduct Authority and the Bank of England.