Losses at HBOS underestimated by as much as £10bn

Calls are growing for the bank's former bosses, Sir James Crosby and Lord Stevenson, to be stripped of their titles

HBOS losses have been underestimated by "billions", according to the man who famously blew the whistle on the failed bank's overly aggressive risk-taking culture. Paul Moore added to the chorus of criticism demanding that Sir James Crosby, the former HBOS chief executive, and Lord Stevenson, chairman of the bank when it was rescued by Lloyds in September 2008, be stripped of their honorific titles.

A Treasury Select Committee source also said the gongs should be "removed" in the wake of a damning Parliamentary Commission on Banking Standards report last week that put the blame for HBOS's collapse squarely on the pair as well as Sir James's successor, Andy Hornby.

However, Mr Moore, who was sacked as head of group regulatory risk at HBOS in 2004 after warning that the bank would eventually find itself in terrible trouble, argued that the report failed to show just how bad the bank's losses have been.

The committee estimated that loans dished out by HBOS's corporate division caused losses of about £25bn between 2008 and 2011. But this did not include the division's investments in businesses and shares of joint ventures that have also struggled so badly in the financial crisis.

Mr Moore said: "We don't know the exact number – that would be very difficult to find – but those of us who watch these things think [the additional losses on these investments] would run into the billions. We need to know."

A banking industry source suggested that this figure could be as high as £10bn, though the way that Lloyds reorganised HBOS's divisions after saving the group means that the commission had to estimate losses.

Mr Moore said that Lord Stevenson and Sir James should "examine their consciences and apologise for what they have done" as this would be "cathartic" for wider society. As a result of taking on HBOS's rotten businesses, Lloyds had to be bailed out by the taxpayer.

Mr Moore added: "In the past I've always said that Crosby should be put in front of an investigation, a tribunal, and lose his knighthood when found guilty. This report has been a tribunal and it has reached a firm conclusion on the back of some really excellent evidence.

"Therefore, he has been found guilty and he should voluntarily give up his knighthood for financial services. Lord Stevenson should give up his peerage. Their actions have caused the misery of literally millions of people."

The Treasury Select Committee source added there was "a staggering lack of competence" and that politicians should be taken out of the process of awarding the country's highest honours. The source added: "Gongs can be removed. It's not easy, but it is what should happen in this case."

Mr Moore said that the punishments for the "HBOS trio" should include class-action lawsuits for breach of fiduciary duty, unlimited fines, and bans on holding directorships. Sir James, whom the commission called the "architect of the strategy that set the course for disaster", has already since quit an advisory role at Bridgepoint, the private equity group that owns Pret a Manger and Leeds-Bradford Airport.

Mr Hornby is also facing pressure to leave his role as chief executive at bookmaker Coral. Although he is widely said to be doing a good job, City analysts argue Mr Hornby's presence would undermine the company should the bookie go through with plans to sell shares on the London Stock Exchange.

Mr Hornby said yesterday that the situation with the commission's findings "is what it is", but declined to comment further. However, it is understood that he believes that the commission has incorrectly calculated the figures on writedowns and impairments in HBOS's three core divisions, meaning that the trio have been condemned by wildly inflated figures. As well as the £25bn estimated in the corporate division, the commission said that there were £15bn of losses in its international work and £7bn in retail, which includes mortgages. That places a total of nearly £50bn in writedowns and impairments for 2008-11, the time when the banks found themselves hardest hit by the crisis that has so devastated the world economy.

The Government is waiting for shares in Lloyds and Royal Bank of Scotland to reach a level that would mean taxpayers would at least get back the tens of billions that were needed for the institutions to survive. However, the state's shares in Lloyds are still worth about £5bn less than the amount ministers poured into the bank.

HBOS was formed out of a merger of Halifax and Bank of Scotland in 2001. The merged group then pursued an aggressive growth strategy Mr Moore warned was too risky, which was ignored until he told the world in late 2008. Lloyds Bank declined to comment yesterday.

PROMOTED VIDEO
News
video
Life and Style
tech
Arts and Entertainment
Southern charm: Nicolas Cage and Tye Sheridan in ‘Joe’
filmReview: Actor delivers astonishing performance in low budget drama
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
film
Arts and Entertainment
Up my street: The residents of the elegant Moray Place in Edinburgh's Georgian New Town
tvBBC's The Secret History of Our Streets reveals a fascinating window into Britain's past
Extras
indybest
News
Albus Dumbledore, the headmaster of Hogwarts School of Witchcraft and Wizardry has been the teaching profession's favourite teacher
education
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Luis Suarez looks towards the crowd during the 2-1 victory over England
sport
Life and Style
Cheesecake frozen yoghurt by Constance and Mathilde Lorenzi
food + drinkThink outside the cool box for this summer’s frozen treats
News
John Barrowman kisses his male “bride” at a mock Gretna Green during the Commonwealth Games opening ceremony
peopleBarrowman's opening ceremony message to Commonwealth countries where he would be sent to prison for being gay
Sport
Sir Bradley Wiggins removes his silver medal after the podium ceremony for the men’s 4,000m team pursuit in Glasgow yesterday
Commonwealth games Disappointment for Sir Bradley in team pursuit final as England are forced to settle for silver
Sport
Alistair Brownlee (right) celebrates with his gold medal after winning the men’s triathlon alongside brother Jonny (left), who got silver
England's Jodie Stimpson won the women’s triathlon in the morning
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Junior Research Analyst - Recruitment Resourcer

£18000 - £20000 per annum + OTE £25K: SThree: SThree Group has been well estab...

Senior Analyst - Financial Modelling

competitive: Progressive Recruitment: This really is a fantastic chance to joi...

Associate CXL Consultant

£40000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: CXL, Triple Po...

Business Anaylst

£60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: Business Anal...

Day In a Page

Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

Meet the US Army's shooting star

Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform