Former HBOS Chief Executive Crosby Offers to Forfeit KnighthoodHoward Mustoe
Former HBOS Plc Chief Executive Officer James Crosby said he will relinquish his knighthood and forfeit part of his pension after lawmakers criticized his leadership of the bailed-out lender.
He will give up 30 percent of his 580,000-pound ($889,000) pension and an honor that entitles him to use the title “Sir” in front of his name, he said in a statement today.
“It’s the right way to do it that he should voluntarily give up his knighthood,” said Paul Moore, who was fired as HBOS head of risk in 2004 for warning the bank’s bosses that its growth plans could threaten its stability. Crosby should “specify what he did wrong. He will be an example to everyone and people will forgive him,” he said in a telephone interview.
In a report published April 5, the Parliamentary Commission on Banking Standards called for Crosby, 57, ex-Chairman Dennis Stevenson, 67, and former HBOS CEO, Andy Hornby, 46, to be banned from working in the financial industry after their “self-delusion” led the lender to require a 28 billion-pound rescue from the government and Lloyds Banking Group Plc. Former Royal Bank of Scotland Group Plc CEO Fred Goodwin was stripped of his knighthood in 2012.
“The government believes it is right that this decision has been reached,” the U.K. Treasury said in a statement referring to Crosby.
Almost five years after the HBOS rescue, the committee singled out the three former executives for embarking on an aggressive expansion strategy, “incompetent” lending and their failure to understand and manage the risks they were taking. By focusing on risky commercial real estate, leveraged loans and funding for entrepreneurs, HBOS ran up bigger loan losses than any U.K. counterpart, forcing it to be rescued, the panel said in a report that described the company as a “manual for bad banking.”
“I am deeply sorry for what happened at HBOS and the ensuing consequences for former colleagues, shareholders, taxpayers and society in general,” Crosby said in the statement.
Business Secretary Vince Cable is studying whether the three can be banned.
So far, the only HBOS executive to be barred from the industry for life is Peter Cummings, who ran the corporate unit responsible for most of the bank’s losses.
“This sets the benchmark for others,” said Labour lawmaker John Mann in a statement today. “At last we have a banker who is prepared to say he got it wrong and wishes to make amends.”