Corporate lending fuelled HBOS's heavy losses
HBOS's disastrous 2008 losses were fuelled by one division in particular - its corporate lending arm.
The division, which has backed takeovers of businesses including building firms Crest Nicholson and McCarthy & Stone, suffered impairment charges of £6.6bn, constituting the bulk of the bank's £10bn plunge into the red.
The bad debts as a proportion of the division's loans jumped to 11.9 per cent, a dramatic increase on the 2.9 per cent seen the previous year.
The bank's new owner, Lloyds, said the writedowns followed a "more conservative" assessment of the corporate division.
The scale of the division's woes are mainly due to its heavy exposure to the hard-hit housing and commercial property sectors.
As head of corporate banking at HBOS, Peter Cummings was behind many of the bank's high-profile deals.
While the economy was strong, he was lauded as a star banker and admired for driving up profits, but now finds himself the latest financial heavyweight to be pilloried for risk-taking.
His penchant for not only lending money to clients but also taking an equity stake in their businesses, often commercial property, made HBOS more vulnerable when the downturn hit.
But Mr Cummings's enthusiasm for property meant he provided loans to housebuilders and property investors even as the economy contracted.
In February 2008, he is reported to have said: "Some people look as though they are losing their nerve, beginning to panic even, in today's testing real estate environment. Not us."
These words will have come back to haunt him as the extent of HBOS's losses became clear.
One deal which went bad was the 2006 acquisition of housebuilder McCarthy & Stone by an HBOS-led consortium, which has since seen the value of the investment plummet. It emerged today that ownership of the company has transferred to the company's senior lenders with a greatly reduced debt burden.
Likewise, the acquisition of housebuilder Crest Nicholson, bought in a 50-50 deal at the height of the property market, has been followed by financial restructuring at the builder.
The results mark a bitter end to the stellar career of the bank's "lifer", who was known as tough and plain-speaking, but well-liked.
He started out as a Bank of Scotland trainee, sweeping floors at a branch in Dumbarton on the outskirts of Glasgow. He began climbing the ranks, taking a secondment to do an MBA at Strathclyde University, and held a variety of positions at the bank.
In 2006 he became chief executive of corporate at HBOS - created by the 2001 merger of Bank of Scotland and Halifax - and held the post until last month, when he and other HBOS directors stepped down following the Lloyds takeover.
Despite his vast earnings over the years, the keen scuba-diver is reported to still live in a £300,000 house in Dumbarton.
That's some guestlist! Stunning images show huge dynastic wedding between Ultra-Orthodox Jewish families which attracted 25,000 guests
Exclusive: Woolwich attack suspect attended meetings of banned Islamist group - and were known by security services
'Sickening, deluded and unforgivable': Horrific attack brings terror to London’s streets
World news in pictures
Ingrid Loyau-Kennett, the mother-of-two hailed as a hero for confronting Woolwich attackers, thought: 'better me than a child'
- 1 Exclusive: Woolwich attack suspect attended meetings of banned Islamist group - and were known by security services
- 2 'Sickening, deluded and unforgivable': Horrific attack brings terror to London’s streets
- 3 Grace Dent: I’m not sure how these people can avoid being called ‘bigots’. And the more ‘civilised’, the worse they are
- 4 Woolwich murder: They killed, then they performed - these men should be starved of our attention
- 5 Woolwich attack: The EDL will seek to exploit this evil crime for their own evil ends
BMF is the UK’s biggest and best loved outdoor fitness classes
Find out what The Independent's resident travel expert has to say about one of the most beautiful small cities in the world
Nook is donating eReaders to volunteers at high-need schools and participating in exclusive events throughout the campaign.
Get the latest on The Evening Standard's campaign to get London's children reading.
Win anything from gadgets to five-star holidays on our competitions and offers page.