PETER CUMMINGS, chief executive of Bank of Scotland Corporate, has defended the bank’s decision to take big equity stakes in two of the UK’s leading house-building companies at the onset of the credit crunch.
Cummings defended the Edinburgh-based bank’s decision to provide debt and equity funding at the peak of the credit bubble to the £1.1 billion buyout of McCarthy & Stone and the £725 million acquisition of Crest Nicholson, even though the equity in both deals is now understood to be worthless.
Both takeovers were made in partnership with West Coast Capital, the private-equity vehicle of Ayrshire-based billionaire Sir Tom Hunter.
Speaking after HBOS’s annual general meeting in Glasgow’s Scottish Exhibition and Conference Centre, Peter Cummings said: “We are a through-the-cycle lender and investor.”
Peter Cummings believes McCarthy & Stone can ride out the storm
He said he believes retirement homes builder McCarthy & Stone ought to be able to ride out the property downturn as it is the dominant player in its niche. “On a global basis, there are greater numbers of people living in retirement today than all the retired people in history,” said Peter Cummings.
In a pugnacious defence of the bank’s continued exposure to housebuilding, property and construction, Peter Cummings said demand for housing from the over 65s would continue to surge despite the housing market slowdown.
Debt in McCarthy & Stone is trading at about 60% of its face value while that in Crest Nicholson is trading at about 65% of par – which implies the equity in these deals is currently worthless. However, Peter Cummings said it does not matter, as the bank is a long-term investor and underlying businesses remain sound.
HBOS’s appetite for housebuilders has not diminished since the start of the credit crunch. In recent weeks it has bought equity stakes in Miller Group and Tulloch Homes.
The bank’s commitment to the sector has been strengthened by an internal HBOS report predicting that the UK government will miss its target of building three million new homes by 2020 by some 500,000 units. In the report, the bank’s chief economist, Martin Ellis, warned the shortfall may be even higher.
Peter Cummings said that HBOS, which last week unveiled a £4bn rights issue to strengthen its capital ratios, has been selectively buying some of the “distressed sales” made by commercial property mutual funds in recent months.
Bank of Scotland Corporate has some £40bn in property and construction loans on its books. Peter Cummings, who last year was paid more than HBOS chief executive Andy Hornby, said the bank has no intention of reducing its exposure to the sector.
This news story about Peter Cummings was published in the Sunday Herald on 4 May 2008
“HBOS forced to defend housing buys”, so reads the title.
Well, er to be honest, we wouldn’t have a clue about such matters, except to say that it clearly appears to be the case, that the bank readily accepts their responsibilities, (to some degree) of their own past behaviours. So, corrective action is imminent, to balance things up a bit?
However, with our five young daughters, all together immorally evicted from our own property, (a perfectly decent, safe and satisfactory Family Home of 14 years) we – the ‘Shalom Family Campaign for Social Justice’ – cannot help but wonder, how long will HBOS Plc, Bank of Scotland Corporate, Sir Tom Hunter, West Coast Capital, AND Castle Bidco – keep their silence in respect to the way in which Crest Nicholson treated our Family, our Home and our way of life?
Surely, ‘Corporate Social Responsibilty’ is all that is needed here? If somebody would be kind enough to urge any one of the above for such a response, we would be most grateful.
Our earlier Family appeals addressed to Mr. Peter Cummings, Mr. Andy Hornby and Sir Tom Hunter, have apparently, so far that is, fallen on deaf ears! Crest Nicholson have always remained speechless!
It would nice to hear any one of them defend what Crest Nicholson did to our Family, especially so, as we still suffer the consequences of that action today.
More than four years on, yet we are still presently deprived of our personal Family possessions, which were also seized, during our immoral eviction. Our Home was destroyed. It is wicked and Crest Nicholson acted ‘wrong’. Just ask them please!
It would be nice to see HBOS and others, act a little more ‘right’, and with a little more compassion. At the recent HBOS agm in Glasgow, Vince and a few of our daughters urged the bank for a little help.
Perhaps, if you feel so inclined, you could please urge them too! It’s not only the case of HBOS defending housing buys.
Thank you.
Marie Louise and Vince Shalom and our daughters, Hannah, Naomi, Rachel, Rebekah and Jessica.
The Shalom Family