Cable pushing for severe punishment for HBOS bosses

UK business secretary Vince Cable is pushing for three former HBOS directors to be stripped of their current board roles and banned from ever being company directors by way of punishment.

Cable has asked officials at the Insolvency Service to look at how the roles of former HBOS chairman Lord Stevenson and former chief executives Sir James Crosby and Andy Hornby could be investigated under the Company Directors Disqualification Act to punish them for their roles in the collapse of HBOS in 2008, in which a £20.5-billion taxpayer bailout through a takeover by Lloyds Banking Group (See: Lloyds takes over HBOS in $21.7 billion deal with British PM Brown's support) left shareholders wiped out while thousands lost their jobs.

The action from Cable comes after a report by the Parliamentary Commission on Banking Standards which accused the three of presiding over a "colossal failure".
According to the report they should not be allowed to run a financial company in the future, but Cable wants theie ban to be extended to all companies.

Cable told The Sunday Times, this was the ''first step'' in a process that could leave them banned as company directors for life.

A spokesman for Cable said, the business secretary had instructed officials at the Insolvency Service to look into the Financial Conduct Authority report [a forthcoming report on banking] when it was published to see whether there were matters that could lead to further action.

Meanwhile, separate reports into the crises at two of the UK's largest lenders revealed a common cause of their problems.

According toa report in the The Observer, that when the early hours of 15 September 2008, saw the US bank Lehman Brothers collapse, the fears of most proved correct as markets crumbled and in the next few weeks and some 30 banks went bust over the world. However, hardly anyone would have imagined the fallout from the crisis to be playing out on the front pages of newspapers five years on, they write.

Two reports were published last week into two banks that fared very differently after the crisis – Barclays and HBOS revealing the bitter fight for survival during those troubled times. While Barclays succeeded, HBOS failed spectacularly.

Both banks' problems were rooted in the phenomenal race for growth in the sunshine years of the early 2000s. In the mad push for growth, traditional caution was cast aside and a dash for expansion, fuelled by lending and financial engineering, took hold.

Barclays moved into tax avoidance, with its structured capital markets division generating over £1 billion in revenue in the four years to 2010 – and failed to stop its traders rigging the Libor interest rate, which eventually resulted in a £290 million fine.

Finch and Treanor write that the two reports ''could not be more different''. The report into the mess at Barclays was commissioned by the bank itself, as a demonstration of its determination to clean up its act.

In complete contrast the HBOS report was produced by the parliamentary commission on banking standards, whose members included MPs and peers and the new archbishop of Canterbury.

The report was a scathing attack on the incompetence of the three men at the bank's helm. ''It pulled no punches and called for City regulators to conduct an investigation into whether the three – long-standing chairman Lord Stevenson, and chief executives Sir James Crosby and Andy Hornby – should be banned from the City for life'' the report said.