Probe ordered in bid to impose ban on former HBOS bosses
BRITAIN’s Business Secretary Vince Cable has ordered an investigation to see whether three former bosses of collapsed British bank HBOS could be banned for life from being company directors, reports said yesterday.
Mr Cable said he had asked his officials to probe whether there were grounds to launch formal proceedings against them.
The influential Parliamentary Commission on Banking Standards attacked the state-rescued group’s former chairman Lord Dennis Stevenson and previous CEs Sir James Crosby and Andy Hornby in a key review published on Friday. It said they should be banned by regulators from working in the financial sector ever again, according to their report into the lender’s collapse.
The panel of MPs blamed the men’s “toxic misjudgments” for a collapse which sparked a vast £20.5bn taxpayer bail-out at the height of the financial crisis.
The institution was so badly run it would have collapsed regardless of the 2008 global finan- cial crisis, the report said, calling it an “accident waiting to happen”.
The commission said £25bn was lost on bad corporate loans, and there were losses of £15bn at its international business and £7bn at its treasury unit.
Mr Cable said he has asked his officials to look into the directors’ conduct while at HBOS to see if a formal investigation under the Company Directors Disqualification Act should be carried out. That would be the “first step” in a process that could lead to them being banned as company directors for life.
“There are things I am able to do. It’s quite a legalistic process.
“I can ask (officials) to look at whether the companies investiga- tions branch take action. We do have this power that I have begun to initiate.”
HBOS was saddled with highrisk investments in the property sector and was rescued by Lloyds TSB in a 2008 takeover that was brokered by the then Labour government. After the ill-fated deal, Lloyds Banking Group received a huge bail-out from the state and remains 39%-owned by the taxpayer.
The committee said regulators bore some of the blame, but primary responsibility lay with Lord Stevenson, Mr Crosby and Mr Hornby. There was a “colossal failure of senior management and the board”, said chairman Andrew Tyrie, a Conservative MP who expressed surprise that only Peter Cummings, who was head of corporate lending at HBOS, had so far been punished.
“The commission has asked the regulator to consider whether these individuals should be barred from undertaking any future role in the sector,” Ms Tyrie said in Friday’s report.
The trio earned millions during their time at the bank and in subsequent roles. Mr Crosby was paid close to £8m during his tenure as HBOS’s CE while Mr Hornby was earning £1.9m a year before leaving the bank. Lord Stevenson’s package was worth more than £800,000 a year.
After the report, Mr Crosby promptly resigned as an adviser to private equity firm Bridgepoint. He is also senior independent director at the world’s biggest catering company, Compass, which declined to comment whether he would keep his £125,000 a year position.
Mr Cummings was fined £500,000 by the now disbanded Financial Services Authority in September and banned for life from the industry.
Mr Hornby declined to comment on the weekend report. After leaving HBOS, he worked as CE of healthcare group Alliance Boots, earning more than £2m a year, and now runs betting shop chain Coral.
Coral had nothing but praise for Mr Hornby, 46, and a spokesman said his position was safe. “Coral is performing extremely well and we are really pleased with the great job Andy (Hornby) is doing,” he said.
Lord Stevenson, 67, who also sits in the upper chamber of Parliament, could not be reached for comment.
A Financial Services Authority report into the collapse of HBOS has been delayed several times, and is not expected to be released until the end of September, according to minutes from a February 21 board meeting released this week. That would be five years after HBOS’s demise. Reuters