Newspaper article The Journal (Newcastle, England)

'Toxic Misjudgment' Led to HBOS Downfall

Newspaper article The Journal (Newcastle, England)

'Toxic Misjudgment' Led to HBOS Downfall

Article excerpt

Byline: BANKING Ruth Lognonne? 0191 201 6139 ?

BANKERS who ran HBOS in the run-up to its dramatic collapse are ultimately to blame for catastrophic failures of management, a damning report found.

The Parliamentary Commission on Banking Standards launched a devastating attack on the bailedout lender's former chairman Lord Stevenson and past chief executives Sir James Crosby and Andy Hornby.

Their "toxic" misjudgments led to the bank's downfall and PS20.5bn taxpayer bail-out at the height of the financial crisis and they should never be allowed to work in the financial sector again, according to the influential commission of MPs and peers.

Peter Cummings is the only former HBOS director to have been penalised by the Financial Services Authority (FSA), after being fined PS500,000 and banned for life from working in the City last September.

But the commission said it was wrong that he should shoulder the blame alone and called on the new City regulator to consider barring Sir James, Mr Hornby and Lord Stevenson from taking up any role in the financial sector.

The commission said in the report: "The 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 came under heavy fire, having infuriated the commission by claiming reckless lending at HBOS was not his fault because he was only there part time.

It said he had shown himself incapable of facing the realities of what placed the bank in jeopardy from that time until now.

The commission found the former HBOS bosses also failed to admit their mistakes and should apologise for their incompetent and reckless board strategy. …

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