In case my banging on about Hornby and Stevenson is not setting the heather on fire…remember that they were among top executives who left HBOS with 6 figure redundancy payments and large pension funds while more than 40,000 employees lost their jobs and 2 million small shareholders lost their life savings. To say nothing of the billions HBOS owes taxpayers.
At Lennoxlove Book Festival I was asked if I was working on a follow-up book on the Royal Bank. I would like to but Ian Fraser, financial journalist, blogger and tireless tweeter has beaten me to it. What promises to be the definitive account of Scotland’s other great banking disaster will be published by Birlinn in 2013.
The Financial Times reports that the Parliamentary Commission on Banking Standards has started an inquiry into the 2008 collapse of HBOS. It will call former executives as witnesses and plans for the first time to use legal counsel to cross-examine them.
Am I just too cynical? The Independent confirms what I have been told, that the Financial Services Authority’s report into its own policing of HBOS before the crash will not appear before next summer. By then it will be five years and more after some of the crucial events and too late. The FSA will be gone and the whole thing can be conveniently brushed under the carpet, with platitudes such as “lessons learned” and “time to move on.”
Surely history teaches us that given freedom, banks will either do something stupid (125%, self-certified and buy-to-let mortgages), evil (manipulating LIBOR) or both (Payment Protection Insurance.)
James Crosby, the man who bailed out as Chief Executive of HBOS in 2006 – two years before the crash – seems to be about to bail out of the Edinburgh property market too, although on this occasion his timing does not look so fortuitous.
What is amazing about the FSA judgement on Peter Cummings is not that they fined him £500,000 or banned him from financial services – as the man who presided over the HBOS corporate banking department responsible for the lion’s share of the losses some might think he got off lightly – but that no-one else appears to be under investigation.
In 1995 Bank of Scotland celebrated 300 years as Britain’s oldest commercial bank. Voted ‘most admired bank’, respected by competitors, applauded by investors and trusted by customers, it looked forward to the next three hundred. Less than 15 years later it was bust, reviled as part of the spectacular collapse of HBOS, the conglomerate it had joined. One of the high-profile victims of the credit crunch, its spectacular fall caused seismic shock waves throughout the financial world. What went wrong?
Ray Perman, who has followed the Bank since the 1970s when he was a Financial Times journalist, uncovered the story from documents and dozens of interviews with people at the top in Bank of Scotland and HBOS – from being the bank of choice for the high-rolling Monte Carlo mega-rich to losing £10 billion.
It is a cautionary tale for our times. In the complex world of modern global finance, the brilliant men who ran the company ignored the simple banking rules that their predecessors learned the hard way three centuries before.
You can read more about the book on its own website (hubristhebook.com coming soon) and buy direct from Birlinn or Amazon.
The Man Who Gave Away His Island by Ray Perman is the biography of a remarkable man, John Lorne Campbell, who bought the Hebridean island of Canna and, with his American musician wife Margaret Fay Shaw, made it an international centre of Gaelic culture.
Ray fell in love with Canna on his first visit in 1977 when he went to interview Campbell about a campaign to save the island’s ferry service.