HBOS banker banned for life

published 13 September 2012

The former head of corporate banking at HBOS has been banned from working in the banking industry for life over his role in the collapse of the bank.

Peter Cummings, the head of HBOS corporate banking from 2006 to 2008, has also been fined £500,000 by City watchdog, the Financial Services Authority (FSA).

The FSA said Cummings had failed to manage risks during a period of aggressive growth by his division.

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Cummings responded saying the decision was "Orwellian", adding that his being singled out was "tokenism at its most sinister".

HBOS was swallowed up by Lloyds Banking Group in 2008 after a run on its shares; the joint group then had to accept £17bn of public money from the government.

Lloyds is still 39%-owned by the tax-payer.

"Although Mr Cummings made efforts to implement improvements between January 2006 and March 2008, he failed to take reasonable steps to assess, manage or mitigate the risks involved in the aggressive growth strategy which the Corporate Division, under his direction, was pursuing," the FSA said in its notice.

"The FSA considers that Mr Cummings' standard of conduct during the relevant period fell below that which would have been reasonable in all the circumstances.

"The aggressive growth strategy, which had a specific focus on high risk, sub-investment grade lending was pursued despite known weaknesses in the control framework, which meant that there was a failure to provide robust oversight and challenge to the business."

In response, Cummings said for the past three and a half years he had been singled out and subjected "to an extraordinary Orwellian process by an organisation that acts as lawmaker, judge, jury, appeal court and executioner".

"The FSA has never had to prove its case to anyone other than itself, and sits safe in the knowledge that few individuals can afford to take it on," he said.