HBOS ex-chiefs admit taking too much risk before bailout
Monday 03 December 2012
Two former bosses of HBOS, the bank which had to be bailed out by the government and taken over by Lloyds at the height of the financial crisis, today admitted that it had taken greater risks than it should.
Sir James Crosby, architect of the merger of Halifax and Bank of Scotland and chief executive of HBOS until 2006, largely blamed the closure of wholesale money markets.
But he added: “with the benefit of hindsight, this brought about a much more significant deterioration in the performance of HBOS’s corporate loans than anyone would have expected or indeed should have been the case.
“That can only be because HBOS was taking more risk than it understood was the case at the time.”
His successor Andy Hornby, who ran the bank until the Lloyds takeover in 2009, blamed most of its troubles on the corporate lending department run by Peter Cummings, who was fined £500,000 by the Financial Services Authority and barred from working in financial services in September.
Hornby said: “The combination of the sharply contracting wholesale funding markets and the corporate division’s concentration in commercial property and lower-grade assets was the primary cause of the ensuing provisions.”
Both men were appearing in front of the Parliamentary Commission on Banking Standards this afternoon.
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