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Bailed out British bank was 'accident waiting to happen'

Bailed out British bank was 'accident waiting to happen'
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A damning report about bailed-out British bank HBOS.

The Parliamentary Commission on Banking Standards says it was so badly run it would have failed even without the 2008 financial crisis

Lawmakers on the Commissioner – which was tasked with finding ways to reform UK banks – it was an “accident waiting to happen” and that there was a “colossal failure of senior management”.

Lloyds Banking Group took over HBOS – in a rescue deal brokered by the government as it struggled under a mountain of bad loans.

It also needed over 30 billion euros of bailout money from the taxpayers.

The Banking Commission recommends the company’s former bosses should be banned from the industry. They are Dennis Stevenson, chairman from the formation of HBOS in 2001 until its collapse, and former chief executives James Crosby and Andy Hornby.

Commission chairman Andrew Tyrie, a Conservative Member of Parliament, expressed surprise that only Peter Cummings, who was head of corporate lending at HBOS, had so far been punished.

“The Commission has asked the regulator to consider whether these individuals (Stevenson, Crosby and Hornby) should be barred from undertaking any future role in the sector,” Tyrie said in the report.

Cummings was fined 500,000 pounds (590,000 euros) by Britain’s financial services regulator in September and banned for life from the industry.

HBOS’s managers blamed the financial crisis for the collapse, but the Commission said the bank’s business model was inherently flawed and its board was a “model of self-delusion”.

“The sums would never have added up,” Tyrie said.

“The Commission has estimated that, taken together, the losses incurred by the corporate, international and treasury divisions would have led to insolvency, regardless of funding and liquidity problems, had HBOS not been bailed out by both Lloyds and the taxpayer,” he said.

The report also said the role played by Britain’s financial regulator had been “thoroughly inadequate”.