Any other business: The FSA and I agree: the HBOS men really were the worst of the lot

I wrote here in November that ‘history may judge the HBOS men to have been the worst of the lot’, and the FSA, in its grindingly slow, bureacratic way, is finally about to catch up with them. The regulator has at last issued a ‘Final Notice’ to the Bank of Scotland arm of HBOS to the effect that its Corporate Banking Division, under the now comfortably retired Peter Cummings, ‘failed to take reasonable care to ensure that [it] adequately and prudently managed high value transactions which showed signs of stress’. In fact — I paraphrase — it seems to have taken no care at all, tearing up the banking textbooks as it piled on lending to the commercial property sector and took equity stakes in many of the deals as well. Rather than spreading risk prudently, the bank concentrated it in huge exposures to the raciest of its real estate customers: in March 2008, the top 30 borrowers were happy recipients of £34 billion of Bank of Scotland depositors’ cash between them.