Jan. 11 (Bloomberg) -- Former top executives at Royal Bank of Scotland Group Plc and HBOS Plc lost sight of sound principles of banking before their institutions were rescued, the Herald cited Bank of England Chief Cashier Andrew Bailey as saying in an interview.
RBS, which was led by Fred Goodwin before the taxpayer took an 83 percent stake to stop it from collapsing in 2008, made some “very bad” decisions, Bailey told the Glasgow-based newspaper.
RBS’s funding profile was “substantially out of line” with what was prudent practice, Bailey told the paper. The controls around the expansion of its investment banking operations were inadequate, he said.
HBOS, which was led by Andy Hornby before it was bought by Lloyds Banking Group Plc in 2008, didn’t have the necessary management understanding to expand its Halifax mortgage banking unit as fast as it did, Bailey told the Herald.
To contact the reporter on this story: Peter Woodifield in Edinburgh at firstname.lastname@example.org
To contact the editor responsible for this story: Colin Keatinge in London at Ckeatinge@bloomberg.net