HBOS ‘self-delusion’ costs Crosby his peerage
FORMER CEO of HBOS James Crosby said yesterday he would relinquish his knighthood and forfeit part of his pension after MPs criticised his leadership of the bailed-out lender.
He will give up 30% of his £580,000 pension and an honour that entitles him to use the title “sir” in front of his name, he said.
Mr Crosby stepped down as HBOS boss in 2006 and shortly after was awarded a knighthood, but the bank had to be bailed out by British taxpayers in 2008.
“It’s the right way to do it that he should voluntarily give up his knighthood,” said Paul Moore, who was fired as HBOS head of risk in 2004 for warning the bank’s bosses that its growth plans could threaten its stability. Mr Crosby should “specify what he did wrong. He will be an example to everyone and people will forgive him,” he said yesterday.
In a report published on April 5, the parliamentary watchdog for banking standards called for Mr Crosby, former chairman Lord Dennis Stevenson, and former HBOS CEO Andy Hornby to be banned from working in the financial industry after their “self-delusion” led the lender to ask for a £28bn rescue from the government and Lloyds Banking Group.
Last year former Royal Bank of Scotland Group CEO Fred Goodwin was stripped of his knighthood.
“The government believes it is right that this decision has been reached,” the UK Treasury said in a statement referring to Mr Crosby.
Almost five years after the HBOS rescue, the committee singled out the three former executives for embarking on an aggressive expan- sion strategy, “incompetent” lending and their failure to understand and manage the risks they were taking. By focusing on risky commercial real estate, leveraged loans and funding for entrepreneurs, HBOS ran up bigger loan losses than any UK counterpart, forcing it to be rescued, the panel said.
Its report described the company as a “manual for bad banking”.
“In view of what has happened subsequently to HBOS, I believe that it is right that I should now ask the appropriate authorities to take the necessary steps for its removal,” he said. “I am deeply sorry for what happened at HBOS and the ensuing consequences for former colleagues, shareholders, taxpayers and society in general,” he said.
He would discuss with the pension scheme’s trustees how the reduction would be implemented, and whether the amount waived should go to support good causes, or benefit shareholders. He said the pension had been built up over his 30- year career, including 12 years at Halifax and HBOS, and was “entirely contractual in nature”.
Politicians have said the award should be cut or Mr Crosby should volunteer to reduce it.
Business Secretary Vince Cable said at the weekend he was studying whether the three could be banned from working in the industry.
So far, the only HBOS executive to be barred from the industry for life is Peter Cummings, who ran the corporate unit responsible for most of the bank’s losses.
“This sets the benchmark for others,” said Labour MP John Mann. “At last we have a banker who is prepared to say he got it wrong and wishes to make amends.” Bloomberg, Reuters