Bloomberg Anywhere Login


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

HBOS Failed Because of Incompetence, Former Chief Crosby Says

Dec. 3 (Bloomberg) -- Former HBOS Plc Chief Executive Officer James Crosby said incompetent lending brought the bank down and apologized to Parliament for its failure.

“The corporate banking loans and the impairments did bring it down,” he said under questioning by a committee of lawmakers in London today. Asked a number of times by Andrew Tyrie, the panel’s chairman, whether incompetent lending destroyed the bank, he responded by saying “correct.”

HBOS’s assets more than doubled to 681 billion pounds ($1.1 trillion) between 2001 and 2008 as the U.K.’s biggest mortgage provider increased lending to entrepreneurs and real estate developers. About 40 percent of the bank’s 117 billion-pound corporate loan book was allocated to real estate and commercial property. Lloyds Banking Group Plc, which purchased HBOS in 2008, had to seek a 20 billion-pound bailout that gave the government a 43 percent stake.

“I’m very sorry for what happened to the bank,” Crosby, who was CEO from 2001, when HBOS was formed out of the merger of Halifax Plc and Bank of Scotland Plc, until 2006, told the Parliamentary Commission on Banking Standards in London today. “It would be wrong for me to disassociate myself.”

Crosby, 56, the Financial Services Authority’s former deputy chairman, said he would not today expect to be accepted as a so-called approved person by that organization. To fulfill some roles at banks and other financial companies in the U.K., such as directors or partners, the regulator must deem an applicant acceptable.

HBOS ‘Problems’

“I don’t expect that if I apply that I would be approved, given my history,” he said. “I think I’m too closely associated with the problems of HBOS for that to be the case.”

Asked by lawmaker Pat McFadden whether he should forfeit the knighthood he was awarded in 2006, after former Royal Bank of Scotland Group Plc CEO Fred Goodwin was stripped of his in January, he said it would not be up to him to decide. He said he understood public anger relating to the cost of rescuing banks.

“When I was awarded that knighthood, it was a huge honor,” he said. “I am in no doubt that my reputation and my achievements will never again be seen in the same light.”

Crosby quit his FSA job in February 2009 after allegations that he fired a whistle-blower when he ran HBOS. He denied those claims today.

Paul Moore, the whistle-blower, wrote in testimony to the Treasury Select Committee that KPMG LLP, the accounting firm that reviewed his allegations, didn’t question key witnesses and wasn’t sufficiently independent. Moore also said Crosby’s positions at HBOS and the FSA created a conflict of interest because the regulator may have been “constrained” in its dealings with him and HBOS.

HBOS, which was bailed out amid the 2008 financial crisis, set risk targets for its corporate bank that weren’t met, Anthony Hobson, chairman of the bank’s audit committee from 2001 to 2008, said on Nov. 20 in a submission to the commission.

Former CEO Andy Hornby in a session after Crosby today said he “bitterly” regretted not foreseeing the year-long seizure of the wholesale credit markets that led to HBOS’s demise. “We missed the big piece,” he said.

To contact the reporter on this story: Howard Mustoe in London at

To contact the editor responsible for this story: Edward Evans at

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.