UK lawmakers call for ban on former bosses for HBOS failure

Fri Apr 5, 2013 10:57am EDT
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By Matt Scuffham

LONDON (Reuters) - Bailed-out British bank HBOS was so badly run it would have failed even without the 2008 financial crisis and the regulator should consider banning its former bosses from the industry, UK lawmakers said in a report.

The Parliamentary Commission on Banking Standards, tasked with finding ways to reform UK banks, said HBOS was an "accident waiting to happen", with bad lending and losses across the business likely to have led to its insolvency even without the funding and liquidity problems of the financial crisis.

HBOS, Britain's biggest mortgage lender, had to be rescued in 2008 with a government-engineered takeover by rival Lloyds (LLOY.L: Quote), which subsequently needed a 20 billion pound (now $30 billion) bailout to survive.

The committee said regulators bore some of the blame, but primary responsibility lay with Dennis Stevenson, chairman from the formation of HBOS in 2001 until its collapse, and former chief executives James Crosby and Andy Hornby.

There was a "colossal failure of senior management and the board", said Commission chairman Andrew Tyrie, a Conservative lawmaker 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," Tyrie said in the report published on Friday.

Crosby was chief executive of HBOS between 2001 and 2006 before being succeeded by Hornby.

The trio earned millions during their time at the bank and in subsequent roles. Crosby was paid close to 8 million pounds during his tenure as HBOS's chief executive. Hornby was earning 1.9 million pounds a year before leaving the bank, while Stevenson's package was worth over 800,000 pounds a year.   Continued...

Former HBOS chief executives James Crosby and Andy Hornby (R) and chairman Dennis Stevenson (C) are seen in a combination of images in London. REUTERS/UK Parliament via Reuters TV/files