November 19th, 2012
My review of Ray Perman’s Hubris: How HBOS Wrecked the Best Bank in Britain was published in the Scottish Review of Books at the weekend. The full review — which is in fact more of an essay about how a small group of misguided people trashed Scotland’s banking sector and squandered three centuries of hard-earned trust — is available to read online at Going For Broke.
In the review, I referred to a brawl that ex senior insiders allege broke out between HBOS’s former chief executive Andy Hornby and its former head of corporate lending, Peter Cummings. The altercation allegedly erupted during a board meeting held at the HBOS head office on Edinburgh’s Mound just weeks before the bank collapsed into the arms of rescuers Lloyds TSB and the British government in September/October 2008.
One of the ex-insiders who told me about the incident said: “I would question whether anyone involved should be allowed to be a company director again, even if one ignores the unbelievable corporate irresponsibility shown by all the board members.”
[At one] infamous HBOS board meeting, held at the bank’s Mound headquarters (now a museum) prior to its September 2008 collapse, senior insiders allege that Sir James Crosby’s successor as chief executive, Andy Hornby, and HBOS’s head of corporate lending, Peter Cummings, got into a fight. One version is that Hornby had his hands clasped around Cummings’ throat in an apparent attempt to throttle the pugnacious Glaswegian. Other directors are said to have had to call security to calm things down.
Former HBOS insiders insist the fisticuffs were triggered by Cummings’ refusal to risk lending even more money to property developers and other flaky corporate borrowers, who by that stage were already toiling under collapsing asset values and intolerable debt burdens, and therefore even less likely to repay the loans than those people to whom he had lent in 2007. Even he, it seems, had decided it was time to take the foot off the accelerator. But it was much too late. To have had any chance of survival given its dependence on a now non-existent resource – wholesale funding – the bank was kaput.