Former corporate banking head at Halifax Bank of Scotland (HBOS) Peter Cummings, is facing a lifetime ban from banking along with a fine of £500,000, for his role in pushing HBOS closer to collapse, which was bailed out by Lloyds in September 2008.
The Financial Services Authority (FSA) said that Cummings had failed to exercise enough caution in his corporate division, when the company undertook extensive expansion strategy.
The FSA director of enforcement and financial crime,Tracey McDermott, said, “Despite being aware of the weaknesses in his division and growing problems in the economy, Cummings presided over a culture of aggressive growth without the controls in place to manage the risks associated with that strategy. Instead of reacting to the worsening environment, he raised his targets as other banks pulled out of the same markets.”
“This focus on growth peaked in 2007 and continued into 2008, despite Cummings being aware of concerns within HBOS about some of the markets in which the division operated and growing signs of problems in the economy. Rather than taking reasonable steps to mitigate potential risks, he directed his division to increase its market share as other lenders were pulling out of deals”, the FSA reported.
Cummings, who felt singled-out in the HBOS collapse, lashed out at FSA referring to its three-year inquiry as “an Orwellian process by an organisation that acts as lawmaker, judge, jury, appeal court and executioner.”
Cummings has rejected FSA’s decision entirely, by saying that many people apart from himself must bear the collective responsibility such as the governments, regulators, and boards of the banks. The ex-HBOS boss felt that he had made immense efforts to improve the risk controls within the unit and said that an independent investigation over the bank’s failure must be launched.