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HBOS senior management could still face bans or fines for bank failure

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  • 11/07/2014
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HBOS senior management could still face bans or fines for bank failure
A team of regulatory investigators is investigating whether any other HBOS senior management should be banned and fined to join ex-head of corporate banking Peter Cummings.

Cummings was singled out as the only HBOS executive so far to face a ban and fine in September 2012 after he was found by the FSA to have failed to “exercise due skill, care and diligence” in running the corporate banking division and failed to manage “high value transactions” as the banking crisis took hold.

The new investigation will also assess the quality of the HBOS loan book in 2008, considering both what was known before October 2008 and what subsequently came to light.

The report will offer a high level analysis of the balance sheets of the Bank of Scotland and Halifax in 1998-2001, and of the merged HBOS balance sheet in 2001-2005, focusing on key prudential indicators such as capital and leverage ratios.

The report’s review period will focus mainly on 1 January 2005 to 1 October 2008, the date when HBOS was in receipt of Emergency Liquidity Assistance (ELA) from the Bank of England.

The aim is to serve the public’s legitimate interest in understanding the key drivers of the 2008 banking crisis.

The review intends to set out why HBOS failed and assess the regulator’s subsequent enforcement investigations.

The regulator will assess everything from the lender’s governance and culture, its capital, asset quality and liquidity positions, as well as systemic vulnerabilities during the period.

The FCA and PRA will also assess the ‘reasonableness’ of the previous regulator’s enforcement investigations led by Andrew Green QC.

The FCA will also make recommendations arising out of the above that have not already been covered in the previous reports, specifically Northern Rock, The Turner Review and RBS.

The report into events and corporate governance leading up to the failure of HBOS is due out before the end of the year, said the regulator.

 

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