Government inquiry into HBOS payoffs

The corporate banking chief was paid £660,000 despite loss

The row over payments to disgraced bankers moved to HBOS yesterday as it emerged that the Government has ordered an inquiry into payoffs its executives have received.

Lloyds Banking Group, which bought HBOS last year as the mortgage giant teetered on the edge of the collapse, is close to completing a review of the terms on which senior HBOS executives left the bank. In particular, there is mounting controversy over a £660,000 payment made to Peter Cummings, the head of HBOS's corporate banking division, which was responsible for many of the bank's loans that have now soured – leading Lloyds to declare yesterday that HBOS made a £10.8bn loss last year.

Mr Cummings is understood to have received the payment in line with the terms of his contract, though other executives at the bank, including former chief executive Andy Hornby and Sir Denis Stevenson, the bank's former chairman, waived their right to severance payments when they left. Mr Cummings is one of the best-known figures in British banking, having built the corporate lending division into a powerhouse at HBOS. While the division was responsible for a sizeable proportion of HBOS's profits in better times, its huge exposure to the property market has lead to disastrous losses over the past year.

Mr Cummings, who is also thought to have a pension pot worth around £6m from his HBOS service, has links to many of the country's best-known business figures, having worked on deals with the likes of Sir Philip Green, the retail tycoon, Victor Tchenguiz, the property investor, Tom Hunter, the Scottish entrepreneur, and the Candy brothers, also major players in the property sector.

A series of big deals with such high-profile figures earned Mr Cummings the reputation of "banker to the stars", but he was forced to quit HBOS earlier this year when the scale of his division's losses became apparent.

Victor Blank, the chairman of Lloyds Banking Group, said yesterday that he did not yet know exactly what terms HBOS executives had left on. However, a spokesman for UK Financial Investments, the government unit set up to deal with the banks which are now state-owned, insisted Lloyds had been asked to review all payments made to those who had quit. "Lloyds agreed with UKFI last week that it would assure itself that all payouts to former HBOS directors were, as UKFI had previously been assured by HBOS, no more than was legally necessary," the spokesman said. "We understand that this process of thorough legal assurance is nearly complete." It is not yet clear whether HBOS executives received similar pension enhancements to the ones received by Sir Fred Goodwin, the former chief executive of Royal Bank of Scotland, who was allowed to retire, at age 50, on the £693,000 annual pension he would have received had he stayed at the bank until age 60.

Start your day with The Independent, sign up for daily news emails
News
The two faces revealed by the ultraviolet light
newsScholars left shaken after shining ultraviolet light on 500-year-old Welsh manuscript
News
Rosamund Pike played Bond girld Miranda Frost, who died in Die Another Day (PA)
news
Arts and Entertainment
books
News
newsHow do you get your party leader to embrace a message and then stick to it? With people like this
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
2015 General Election
May2015

Poll of Polls

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 General

Recruitment Genius: In House Counsel - Contracts

Negotiable: Recruitment Genius: This leading supplier of compliance software a...

Recruitment Genius: Associate System Engineer

£24000 - £30000 per annum: Recruitment Genius: The Associate System Engineer r...

Recruitment Genius: Executive Assistant

Negotiable: Recruitment Genius: An Executive Assistant is required to join a l...

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Day In a Page

General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?
How Tansy Davies turned 9/11 into her opera 'Between Worlds'

How a composer turned 9/11 into her opera 'Between Worlds'

Tansy Davies makes her operatic debut with a work about the attack on the Twin Towers. Despite the topic, she says it is a life-affirming piece
11 best bedside tables

11 best bedside tables

It could be the first thing you see in the morning, so make it work for you. We find night stands, tables and cabinets to wake up to
Italy vs England player ratings: Did Andros Townsend's goal see him beat Harry Kane and Wayne Rooney to top marks?

Italy vs England player ratings

Did Townsend's goal see him beat Kane and Rooney to top marks?
Danny Higginbotham: An underdog's tale of making the most of it

An underdog's tale of making the most of it

Danny Higginbotham on being let go by Manchester United, annoying Gordon Strachan, utilising his talents to the full at Stoke and plunging into the world of analysis
Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police

Steve Bunce: Inside Boxing

Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police
No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat