In 1995 the Financial Times called Bank of Scotland the “most boring bank in Britain”, and with good reason: for 300 years it had been characterised by a rectitude bordering on the Calvinistic. But in 2001 the bank merged with Halifax to become HBOS; seven years later, on the brink of collapse, it was taken over by Lloyds TSB.
So what happened? Ray Perman, in this admirably lucid account, says HBOS broke a simple rule: “It ran out of cash and lent to people who could not repay”, becoming exposed to the sub-prime mortgage market. Perman frames the story as one of “human weakness and pride”, with a new generation at the bank desiring greater risks and rewards than their predecessors. Unfortunately for the rest of us, they were not the only ones.