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In summary: the downfall of HBOS's corporate banking division

  • HBOS's corporate banking division was by Peter Cummings - who reportedly left with a £660,000 pay-off and a £6m pension pot.
  • When Lloyds took over HBOS at the height of the banking crisis, it was forced to write off more than £20bn
  • In the three years from the start of 2006, its transactions increased in size and complexity and left it with concentrated exposures to property and significant large borrowers.


FSA: HBOS's corporate division took too many risks

The Financial Services Authority said HBOS's corporate division took too many risks from the start of 2006, leaving it vulnerable to the financial downturn.

Tracey McDermott, FSA acting director of enforcement, said:

"The conduct of the Bank of Scotland illustrates how a failure to meet regulatory requirements can end not just in massive costs to a firm, but losses to shareholders, taxpayers and the economy.

"Banks and other firms have to manage their business by ensuring that their systems and controls are appropriate for the risks that they are running."

Bank of Scotland 'guilty of serious misconduct'

The Bank of Scotland was guilty of "very serious misconduct" which contributed to the taxpayer bailout of its parent company HBOS, the City watchdog has found.

The FSA criticised the "aggressive deal structures" increasingly pursued by the bank and said it failed to reduce its risky behaviour despite expectations of a downturn in the markets.

Although this behaviour contributed to the taxpayer bailout of HBOS - and the eventual bailout of Lloyds, which bought HBOS - there will be no punishment as the FSA seeks to protect taxpayers' money.