Suffolk: Commission on Banking Standards slams former HBOS chairman Lord Stevenson of Coddenham
- Credit: PA
FORMER Halifax Bank of Scotland chairman Lord Stevenson, who has a home is Suffolk, is among three former top bosses at HBOS accused in a new report of “catastrophic failures of management” in the run-up to the bank’s dramatic collapse.
The Parliamentary Commission on Banking Standards launched a devastating attack on the bailed-out lender’s Lord Stevenson and past chief executives Sir James Crosby and Andy Hornby.
Their “toxic” misjudgments led to the bank’s downfall and £20.5billion taxpayer bail-out at the height of the financial crisis and they should never be allowed to work in the financial sector again, according to the influential commission of MPs and peers.
Peter Cummings is the only former HBOS director to have been penalised by the Financial Services Authority (FSA), after being fined £500,000 and banned for life from working in the City last September.
But the commission said it was wrong that he should shoulder the blame alone and called on the new City regulator to consider barring Sir James, Mr Hornby and Lord Stevenson from taking up any role in the financial sector.
The commission said in the report: “The primary responsibility for the downfall of HBOS should rest with Sir James Crosby, architect of the strategy that set the course for disaster, with Andy Hornby, who proved unable or unwilling to change course, and Lord Stevenson, who presided over the bank’s board from its birth to its death.”
Lord Stevenson in particular came under heavy fire, having infuriated the commission by claiming reckless lending at HBOS was not his fault because he was “only there part time”.
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It said he had shown himself “incapable of facing the realities of what placed the bank in jeopardy from that time until now”.
The commission found the former HBOS bosses also failed to admit their mistakes and should apologise for their “incompetent and reckless board strategy”.
Sir James, who was chief executive of HBOS from 2001 to 2006 and also former deputy chairman of the FSA, is currently working in the City as a member of the European Advisory Board at private equity firm Bridgepoint. He is also a senior independent director of catering firm Compass.
While Royal Bank of Scotland’s disgraced former boss Fred Goodwin has been stripped of his knighthood, Sir James and Lord Stevenson have retained their titles.
Dennis Stevenson was created a life peer in 1999, taking the title Baron Stevenson of Coddenham and sitting in the House of Lords as a cross-bencher.
The same year he became chairman of Halifax plc, formerly the UK’s largest building society until its demutualisation, and he retained the role when it merged with Bank of Scotland to form HBOS 2001.
He resigned following the near-collapse of HBOS at the height of the financial crisis in 2008 when the bank was rescued through a merger with Lloyds TSB.
Andrew Tyrie, the Conservative MP who chairs the commission, today refused to say whether he would like to see Sir James or Lord Stevenson stripped of their titles, saying the public were not concerned about knighthoods.
“That is not our jobs, we were not set up as a Banking Commission to strip people of their titles,” he told BBC Radio 4’s Today programme.
Asked why he would not give an opinion, Mr Tyrie said: “I am not ducking it, I am making sure the commission does what it is supposed to do which is work out what we should learn from all this to make sure this sort of thing doesn’t happen again.
“I don’t think the public are so concerned about knighthoods, what they want is reassurance that they won’t get hit by this again, that people who do such damage are identified and are prevented from practising and that people should not be allowed to gamble with our money and then walk away with huge bonuses.”
Mr Hornby is currently chief executive of gaming group Gala Coral and Lord Stevenson has gone on to hold a number of non-executive board positions since leaving HBOS.
The FSA, which was replaced as part of a regulatory overhaul on April 1, was also heavily criticised by the commission for its “thoroughly inadequate” regulation of HBOS.
Mr Tyrie said: “The HBOS story is one of catastrophic failures of management, governance and regulatory oversight.”
He said that regulators also have “a lot of explaining to do”. He said: “From 2004 up until the latter part of 2007, the FSA was not so much ‘the dog that didn’t bark’ as ‘the dog barking up the wrong tree’”.
The commission confirmed that £28bn in total was injected into HBOS by the Treasury and Lloyds, which merged with the bank under a mammoth rescue, with the taxpayer still sitting on a £5 billion paper loss on cash pumped into the group.
The City regulator has agreed to produce a report on the failure of HBOS and the FSA’s conduct and the commission has called on it to shed more light on a raft of management and regulatory failings in the run up to the bank’s collapse.
“The Treasury Committee has appointed specialist advisers whose job will be to ensure that this work is done thoroughly,” it added.
A Treasury spokesman said: “The failure of HBOS was a symptom of the financial crisis and the regulatory system in place at that time.
“The Government is committed to learning the lessons of the past and protecting taxpayers from bank failures in the future.
“That is why it has fundamentally reformed the way financial services are regulated in this country.
“The launch of the new regulatory system earlier this week is the start of resetting the system of financial regulation in our country.
“The new system represents a fundamental change in how financial services will be regulated in the future.
“The Government has done away with the discredited system that failed to sound the alarm as the financial system went wrong, and put in its place a new system that puts the Bank of England back in charge and that will help ensure a strong, safe and successful financial system in Britain.”