Why did the watchdog chase just one banker over HBOS collapse?

The Bank of England will examine barring executives over the 2008 near-collapse of mortgage lender HBOS at the height of the global financial crisis.

The review concludes that ultimate responsibility for the failure of HBOS rests with the Board and senior management.

“There is plainly a public interest in the FCA and/or the PRA giving proper consideration as to whether to investigate any other former members of HBOS’s senior management in the light of the failure of this systemically important bank”.

One former HBOS executive, Peter Cummings, received a ban from working in senior finance roles and a £500,000 fine after a formal investigation.

Sir Brian Pomeroy, Senior Independent Director at the Financial Conduct Authority and Chairman of the HBOS Review Steering Committee said: “The review into HBOS has involved a dedicated team sourcing and considering a huge amount of material including reviewing around a quarter of a million documents and interviews with 80 key individuals”.

The former Financial Services Authority (FSA), which was abolished in 2013, also came in for heavy criticism for failing to “establish an appropriate standard of safety and soundness” in its supervision of HBOS.

“The scope of the FSA’s enforcement investigations in relation to the failure of HBOS was not reasonable”, Mr Green wrote.

The Bank of England confirmed it was considering “further enforcement action” and will make a decision “as early as possible next year”. Other executives mentioned in the report include former chief executive of the treasury division Lindsay Mackay and ex-head of the global division Colin Matthew.

Regulators are now left powerless to levy fines against any managers deemed responsible due to the length of time that has passed.

They are ex-chief executives Andy Hornby and James Crosby, as well as former chairman Dennis Stevenson.

Two reports were published as part of a review of one of the most controversial episodes of Britain’s financial crisis which led to a state-brokered takeover from Lloyds Banking Group Plc in 2009 and a 20.5 billion-pound ($31.3 billion) taxpayer bailout.

Mr Crosby was stripped of his knighthood at his own request following the report, which said he was the “architect of the strategy that set the course for disaster”.

It said: “The report does not contain evidence that would justify any further enforcement action against executives”.

It also revealed from interviews with former FCA enforcement boss Clive Adamson that he believed “the people most culpable were let off”.

When those loans and investments began to turn sour, HBOS executives applied pressure to KPMG, the bank’s auditor, to minimise the impairment charges associated with them.