'FSA action saved HBOS from speculators'
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.City speculators almost tipped HBOS over the edge months before its government-brokered rescue by Lloyds Banking Group, members of the Parliamentary Commission on Banking Standard were told yesterday.
Peter Hickman, the group director of risk between 2007 and 2008, said the bank was only saved by reassurances from the Financial Services Authority in the wake of a 20 per cent plunge in its share price in March 2008 sparked by speculators. Depositers had started to withdraw money.
HBOS believed an event like the financial crisis to be "inconceivable", the bank's ex finance director, Phil Hodkinson, said. "We had stress tested against what would happen if some wholesale markets were closed to banks. The event which did bring down the bank, that all wholesale markets would be closed to banks for some period of time, was not conceivable," he explained.
He also said the bank was caught out by the deterioration in the property market. "From the information the board received it wasn't evident that the corporate division was pursuing aggressive growth. We hadn't foreseen that the UK property market, which was a third of our book, would suffer as much as it did."
Peter Cummings, who headed the corporate unit, was fined and banned from the City.
Later in the day, Sir John Vickers defended his plans to force banks to "ring-fence" retail deposits from more risky investment banking as "absolutely realistic, achievable and workable" under challenge from MPs.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments