By a Newsnet reporter
The SNP has responded to the publication of the Banking Standards Commission report into the failure of HBOS by highlighting that the failures took place under a regulatory system put in place by the previous Labour government.
SNP Treasury spokesperson Stewart Hosie MP has said that as Chancellor during the period when the bank got into difficulties, Alistair Darling has lost all financial credibility, and the people of Scotland cannot trust the economic judgement of the leader of the anti-independence campaign.
The report places the blame for the failure of HBOS with senior executives at the bank, who operated under a “hands-off” regulatory system put in place by the Labour government. The committee said regulators bore a proportion of the blame, but the main responsibility for the bank’s collapse lay with Dennis Stevenson, former chairman of HBOS, and former chief executives Sir James Crosby and Andy Hornby. The report calls for the three to be given lifetime bans from working in the UK financial sector.
None of the individuals named in the report have been censured for the bank’s failings. James Crosby – whom the report describes as “the architect” of the bank’s failure – was appointed by Mr Darling as deputy director of the Financial Services Authority, just one year after leaving HBOS. After publication of the damning report, Mr Crosby stepped down from his position as advisor to private equity firm Bridgepoint.
Dennis Stevenson worked three days a week as chair of the board of HBOS, for which he received an annual salary of £800,000 and bonuses which reportedly ran to millions of pounds. Mr Stevenson was awarded the title Lord Stevenson in 1999 by Tony Blair’s government, and was later appointed to the Institute for Government, a think tank which provides advice “to improve government effectiveness”.
The Parliamentary Commission on Banking Standards, which was investigating possible ways to reform the UK banking system, said HBOS was an “accident waiting to happen”. The report catalogued bad lending and losses across the business which it said were likely to have led to the bank’s failure even without the funding and liquidity problems caused by the global financial crisis.
Under the loose regulatory system which was introduced by the Labour government and enthusiastically promoted by Gordon Brown – and backed by Alistair Darling – banking chiefs were able to operate with a minimum of oversight from regulatory bodies.
The cost to the taxpayer of the failure of HBOS has run to more than £20bn. Since the bank’s near collapse, 10.5% of its loan book has been classified as ‘bad debt’, the worst of any UK based bank and more than double the bad debts of the next worst bank, RBS.
Following the publication of the Banking Standards Commission report SNP Treasury Spokesperson Stewart Hosie MP said:
“Clearly there are serious lessons which must be learnt from the failures that took place at HBOS, and lessons must also be learnt from how the circumstances which led to the collapse of HBOS were allowed to take shape in the first place.
“The FSA delivered a stinging criticism of HBOS at the time but it was not only senior bank executives who failed the bank, but Labour’s tri-partite regulation in place at the time which allowed HBOS and other banks to engage in particularly risky investments.
“Alistair Darling has a lot to answer for. People are still paying the price of his legacy of economic mismanagement and the serious lapses in judgement that took place. We now know from what Mervyn King said that Mr Darling’s dither and delay exacerbated the financial crisis, and led to even more jobs being lost.
“It beggars belief that Mr Darling, who has absolutely no financial credibility left, is leading a campaign asking the people of Scotland to trust him that they are better together with a Tory UK government.”