HBOS

HBOS was formed by a merger of Halifax and Bank of Scotland in 2001, Halifax having demutualised and floated four years prior.

{{further|Bank of Scotland|Halifax Building Society}}

In 2006, HBOS secured the passing of the HBOS Group Reorganisation Act 2006 (c. i), a local act of Parliament that rationalised the bank's corporate structure.{{cite web |url=http://www.legislation.gov.uk/acts/ukla/2006/1|title=HBOS Group Reorganisation Act 2006 |year=2006 |access-date=17 September 2008}} The act allowed HBOS to make the Governor and Company of the Bank of Scotland a public limited company, Bank of Scotland plc, which became the principal banking subsidiary of HBOS. Halifax plc and Capital Bank plc transferred its undertakings to Bank of Scotland plc.The Halifax brand name was retained, Halifax then began to operate under the latter's UK banking licence.

The provisions in the act were implemented on 17 September 2007.

The share price peaked at over 1150p in February 2007.{{cite web | url=http://www.hemscott.com/companies/company-chart.do?companyId=3428&from=1/9/2006&to=1/6/2007&returnPeriod=8 | title=Share Price Chart – HBOS PLC (LSE:HBOS)|access-date=19 December 2010}}

In 2004, Paul Moore, HBOS head of Group Regulatory Risk, warned senior directors at HBOS about excessive risk-taking. He was dismissed, and his concerns not acted on.

In March 2008, HBOS shares fell 17 percent amid false rumours that it had asked the Bank of England for emergency funding.{{cite news |url=https://www.theguardian.com/business/2008/mar/20/creditcrunch.hbosbusiness|title=Authorities avert run on HBOS caused by false rumours|access-date=17 September 2008 | work=The Guardian | location=London | first=Jill | last=Treanor | date=20 March 2008}} The Financial Services Authority conducted an investigation as to whether short selling had any links with the rumours. It concluded that there was no deliberate attempt to drive the share price down.{{cite web|url=http://www.fsa.gov.uk/pages/Library/Communication/PR/2008/086.shtml|title=FSA concludes HBOS rumours investigation|year=2008|access-date=17 September 2008|archive-date=1 February 2011|archive-url=https://web.archive.org/web/20110201190343/http://www.fsa.gov.uk/pages/Library/Communication/PR/2008/086.shtml|url-status=dead}}

On 17 September 2008, very shortly after the demise of Lehman Brothers, HBOS's share price suffered wild fluctuations between 88p and 220p per share, despite the FSA's assurances as to its liquidity and exposure to the wider credit crunch.{{cite web|url=http://www.fsa.gov.uk/pages/Library/Communication/Statements/2008/hbos.shtml|title=HBOS Statement|year=2008|access-date=11 October 2008|archive-date=13 June 2011|archive-url=https://web.archive.org/web/20110613184842/http://www.fsa.gov.uk/pages/Library/Communication/Statements/2008/hbos.shtml|url-status=dead}}

However, later that day, the BBC reported that HBOS was in advanced takeover talks with Lloyds TSB to create a "superbank" with 38 million customers. That was later confirmed by HBOS. The BBC suggested that shareholders would be offered up to £3.00 per share, causing the share price to rise, but later retracted that comment.{{cite news |url=http://news.bbc.co.uk/go/rss/-/1/hi/business/7620483.stm |title=HBOS in merger talks with Lloyds TSB |publisher=BBC News |date=17 September 2008 |access-date=17 September 2008}}{{cite news |url=http://uk.reuters.com/article/mergersNews/idUKWLA975220080917 |archive-url=https://archive.today/20120703164022/http://uk.reuters.com/article/mergersNews/idUKWLA975220080917 |url-status=dead |archive-date=3 July 2012 |title=HBOS confirms in takeover talks with Lloyds TSB |date=17 September 2008 |access-date=17 September 2008 | work=Reuters | first=Paul | last=Hoskins}} Later that day, the price was set at 0.83 Lloyds shares for each HBOS share, equivalent to 232p per share,{{cite news |url=http://uk.reuters.com/article/businessNews/idUKLH43730920080918 |archive-url=https://archive.today/20120716042224/http://uk.reuters.com/article/businessNews/idUKLH43730920080918 |url-status=dead |archive-date=16 July 2012 |title=Lloyds seals deal for HBOS |work=Reuters |date=18 September 2008 |access-date=18 September 2008}} which was less than the 275p price at which HBOS had raised funds earlier in 2008.{{cite news |url=https://www.theguardian.com/business/2008/sep/17/lloydstsbgroup.hbosbusiness |title=Lloyds TSB takeover talks with HBOS: the key issues |work=The Guardian |date=17 September 2008 |access-date=17 September 2008 | location=London | first=Nils | last=Pratley}} The price was later altered to 0.605 Lloyds shares per HBOS share.{{cite web|url=http://www.oft.gov.uk/shared_oft/press_release_attachments/LLloydstsb.pdf|archive-url=http://webarchive.nationalarchives.gov.uk/20140402142426/http://www.oft.gov.uk/shared_oft/press_release_attachments/LLloydstsb.pdf|url-status=dead|archive-date=2014-04-02|title=Anticipated acquisition by Lloyds TSB plc of HBOS plc - Report to the Secretary of State for Business Enterprise and Regulatory Reform|date=24 October 2008|via=National Archives}}

To avoid another Northern Rock-style collapse, the UK government announced that should the takeover go ahead, it would be allowed to bypass competition law.

Alex Salmond, Scotland's First Minister, previously an economist, said of the takeover:

"I am very angry that we can have a situation where a bank can be forced into a merger by basically a bunch of short-selling spivs and speculators in the financial markets."{{cite news |url=http://news.bbc.co.uk/1/hi/scotland/edinburgh_and_east/7621153.stm |title=Salmond attacks financial 'spivs' |publisher=BBC News |date=17 September 2008 |access-date=17 September 2008}}

On 18 September 2008, the terms of the recommended offer for HBOS by Lloyds TSB were announced. The deal was concluded on 19 January 2009.[http://www.lloydstsb.com/merger/what_happens_next.asp Lloyds: What happens next?] {{webarchive|url=https://web.archive.org/web/20081026112338/http://www.lloydstsb.com/merger/what_happens_next.asp |date=26 October 2008 }} The three main conditions for the acquisition were:

• Three quarters of HBOS shareholders voted in favour of the board's actions;
• Half of Lloyds TSB shareholder voted to approve the takeover;{{cite web |url=http://www.lloydstsb.com/merger/shareholder_questions_answered.asp?WT.ac=LTSBacquisitionofHBOS | title = Lloyds TSB Your shareholder questions answered |publisher=Lloyds TSB |access-date=3 November 2008}} {{Dead link|date=October 2010|bot=H3llBot}}
• UK government dispensation with respect to competition law.

A group of Scottish businessmen challenged the right of the UK government to approve the deal by over-ruling UK competition law, but this was rejected. The takeover was approved by HBOS shareholders on 12 December.

Prime Minister Gordon Brown personally brokered the deal with Lloyds TSB. An official{{who|date=December 2011}} said: "It is not the role of a Prime Minister to tell a City institution what to do".{{cite news |url=http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4772801.ece |archive-url=https://web.archive.org/web/20080923191518/http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4772801.ece |url-status=dead |archive-date=23 September 2008 |title=Gordon Brown steps in to secure HBOS rescue |work=The Times |date=17 September 2008 |access-date=18 September 2008 | location=London | first1=Siobhan | last1=Kennedy | first2=Philip | last2=Webster | first3=Christine | last3=Seib}} The Lloyds TSB board stated that merchant banks Merrill Lynch and Morgan Stanley were among the advisers recommending the takeover.

Lloyds Banking Group said Edinburgh-based HBOS, which it had absorbed in January, made a pre-tax loss of £10.8 billion in 2008. Andy Hornby, the former chief executive of HBOS, and Lord Stevenson of Coddenham, its former chairman, appeared before the Commons Treasury Committee to answer questions about the near-collapse of the bank. Hornby said: "I'm very sorry what happened at HBOS. It has affected shareholders, many of whom are colleagues, it's affected the communities in which we live and serve, it's clearly affected taxpayers, and we are extremely sorry for the turn of events that has brought it about."

On 13 October 2008, Gordon Brown's announcement that government must be a "rock of stability" resulted to an "unprecedented but essential" government action: the Treasury would infuse £37 billion ($64 billion, €47 billion) of new capital into Royal Bank of Scotland Group Plc, Lloyds TSB and HBOS Plc, to avert financial sector collapse or UK "banking meltdown". He stressed that it was not "standard public ownership", as the banks would return to private investors "at the right time".{{cite news|url=http://news.bbc.co.uk/2/hi/uk_news/politics/7666695.stm|title=UK – UK Politics – Brown: We'll be rock of stability|publisher=BBC News|access-date=15 June 2015}}{{cite web|url=https://www.bloomberg.com/apps/news?pid=20601102&sid=aCMY6HCQ_Tjc&refer=ukU.K.|title=U.K. Stocks Rebound After Government Bank Bailout; Lloyds Gains|website=Bloomberg News|access-date=15 June 2015}} The Chancellor of the Exchequer, Alistair Darling, claimed that the British public would benefit from the rescue plan, because the government would have some control over RBS in exchange for about £20 billion of funding. Total State ownership in RBS would be 60%, and 40% for HBOS.{{cite news|url=https://www.theguardian.com/politics/2008/oct/13/alistairdarling-economy|title=Alistair Darling: UK taxpayer will benefit from banks rescue|author=Hélène Mulholland|newspaper=The Guardian|access-date=15 June 2015|date=2008-10-13}} Royal Bank of Scotland said it intended to raise £20 billion ($34 billion) capital with the government's aid; its chief executive Fred Goodwin resigned. The government acquired $8.6 billion of preference shares and underwrote $25.7 billion of ordinary shares. Thus, it intended to raise £15 billion (€18.9 billion, $25.8 billion) from investors, to be underwritten by the government. The State would pay £5 billion for RBS, while Barclays Bank raised £6.5 billion from private sector investors, with no government help.{{Cite web |url=http://afp.google.com/article/ALeqM5jIZ0eeVC4v6Rjfcbp7RJEqJLuhdA |title=Afp.google.com, Britain to invest up to 37 billion pounds in ailing banks |access-date=13 October 2008 |archive-url=https://web.archive.org/web/20121001141513/http://afp.google.com/article/ALeqM5jIZ0eeVC4v6Rjfcbp7RJEqJLuhdA |archive-date=1 October 2012 |url-status=dead |df=dmy-all }} Reuters reported that Britain could inject £40 billion ($69 billion) into the three banks including Barclays.{{cite news|url=https://www.reuters.com/article/innovationNewsIndustryMaterialsAndUtilities/idUSTRE49B37P20081012?sp=true|title=British banks set for 40 billion pound rescue: sources|agency=Reuters|access-date=15 June 2015|newspaper=Reuters|date=2008-10-12}}

In 2015, an investigation by the Prudential Regulation Authority and Financial Conduct Authority blamed the failure requiring the bailout on the bank's executives, as well as being critical of the Financial Services Authority (FSA), the then-regulator. A parallel investigation into the FSA's enforcement process concluded it was too late to fine responsible executives, but up to 10 former HBOS executives could be banned from the financial services industry.{{cite news |url=https://www.telegraph.co.uk/finance/newsbysector/banksandfinance/12005345/HBOS-report-Lloyds-collapse-latest-news.html |title=Up to 10 former HBOS executives could be banned over collapse, damning report finds |author=Tim Wallace |newspaper=Daily Telegraph |date=19 November 2015 |access-date=19 November 2015}}

Causes of failure were identified as follows:

• The board failed to instil a culture within the firm that balanced risk and return appropriately, and it lacked sufficient experience and knowledge of banking.
• There was a flawed and unbalanced strategy and a business model with inherent vulnerabilities arising from an excessive focus on market share, asset growth and short-term profitability.
• The firm's executive management pursued rapid and uncontrolled growth of the Group's balance sheet. That led to an over-exposure to highly cyclical commercial real estate (CRE) at the peak of the economic cycle.
• The board and control functions failed to challenge effectively the pursuit of that course by the executive management, or to ensure adequate mitigating actions.
• The underlying weaknesses of HBOS's balance sheet made the Group extremely vulnerable to market shocks and eventual failure as the crisis in the financial system intensified.

After putting the investigation on hold in 2013, in April 2017, the Financial Conduct Authority resumed its probe of "the way HBOS handled fraud allegations at its Reading branch".{{cite news |last=Dunkley |first=Emma |date=7 April 2017 |title=UK watchdog restarts probe into HBOS fraud case |url=https://www.ft.com/content/61664a4e-1b69-11e7-a266-12672483791a | work=Financial Times |access-date=9 April 2017}}

On 21 June 2019, the Financial Conduct Authority fined the Bank of Scotland £45.5 million over its failure to report suspicions of fraud at its Reading branch which led to the jailing of six people. The authority said that the bank "risked substantial prejudice to the interests of justice" by withholding information. The fine was reduced by almost £20 million because the bank agreed to settle.{{cite web|url=https://www.theguardian.com/business/2019/jun/21/bank-of-scotland-fined-by-regulator-over-reading-fraud|title=Bank of Scotland fined £45.5m by regulator over Reading fraud|work=The Guardian|date=21 June 2019|access-date=21 June 2019}}

{{Main|HBOS Marketing Campaign}}

In December 2008, the British anti-poverty charity, War on Want, released a report documenting the extent to which HBOS and other UK commercial banks invested in, provided banking services for, and made loans to arms companies. The charity wrote that HBOS held shares in the UK arms sector totalling £483.4 million, and served as principal banker for Babcock International and Chemring.War on Want, [http://www.waronwant.org/news/press-releases/16333-banks-slated-on-arms-sales Banking on Bloodshed ] {{Webarchive|url=https://web.archive.org/web/20090417162131/http://www.waronwant.org/news/press-releases/16333-banks-slated-on-arms-sales |date=17 April 2009 }}

File:Lloyds and Halifax in Cross Gates.jpg and Lloyds TSB branches outside Crossgates Shopping Centre, Cross Gates, Leeds.]]

During 2003, The Money Programme uncovered systemic mortgage fraud throughout HBOS. The Money Programme found that during the investigation, brokers advised the undercover researchers to lie on applications for self-certified mortgages from, among others, the Bank of Scotland, the Mortgage Business and Birmingham Midshires.{{cite web|url=http://www.bbc.co.uk/pressoffice/pressreleases/stories/2003/10_october/29/money_programme_mortgage.shtml|title=Press Office – Money Programme Mortgage Madness|access-date=15 June 2015|publisher=BBC}} All three were part of the Halifax Bank of Scotland Group, Britain's biggest mortgage lender. James Crosby, head of HBOS at the time, refused to be interviewed in relation to the exposed mortgage fraud. Further examples of mortgage fraud have come to light, which has seen mortgage brokers take advantage of fast track processing systems, as seen at HBOS, by entering false details, often without the applicant's knowledge.

In 2002, HBOS dropped the Bank of Wales brand and absorbed the operations into Bank of Scotland Business Banking.

On 13 February 2009, Lloyds Banking Group revealed losses of £10 billion at HBOS, £1.6 billion higher than Lloyds had anticipated in November because of deterioration in the housing market and weakening company profits.{{cite news |url=https://www.telegraph.co.uk/finance/newsbysector/banksandfinance/4612681/Lloyds-shares-tumble-as-HBOS-slumps-to-10bn-loss.html |date=13 February 2009 |access-date=28 February 2009 |title=Lloyds shares tumble as HBOS slumps to £10bn loss | work=The Daily Telegraph | location=London}} The share price of Lloyds Banking Group plunged 32% on the London Stock Exchange, carrying other bank shares with it.

In September 2012, Peter Cummings, the head of HBOS corporate banking from 2006 to 2008, was fined £500,000 by the UK financial regulator over his role in the bank's collapse. The Financial Services Authority (FSA) also banned Cummings from working in the banking industry. The losses in his division exceeded the initial taxpayer bailout for the bank in October 2008.{{cite news|url=https://www.bbc.co.uk/news/business-19579124|title=HBOS banker Peter Cummings fined by regulator|publisher=BBC News|access-date=15 June 2015}}{{cite news|last=Kossoff|first=Julian|title=Ex-HBOS Rainmaker Peter Cummings Hit with £500,000 FSA Fine and Life Ban|url=http://www.ibtimes.co.uk/articles/383608/20120912/peter-cummings-hbos-lloyds-ban-fine.htm|access-date=11 October 2012|newspaper=International Business Times|date=12 September 2012}}

On 3 October 2010, Lynden Scourfield, former director of mid-market high-risk at Bank of Scotland Corporate, his wife Jacquie Scourfield, ex-director of Remnant Media Tony Cartwright, and ex-NatWest banker David Mills, were arrested on suspicion of fraud by the Serious Organised Crime Agency.{{cite web|url=http://www.heraldscotland.com/business/corporate-sme/former-hbos-banker-bailed-over-alleged-money-laundering-1.1058954|title=Former HBOS banker bailed over alleged money-laundering|work=The Herald|location=Glasgow|access-date=15 June 2015}}{{cite news |last= Wilson |first= Harry |title= Former HBOS managers charged in £35m fraud investigation|url= https://www.telegraph.co.uk/finance/financial-crime/9789289/Former-HBOS-managers-charged-in-35m-fraud-investigation.html| date= 8 January 2013|newspaper= The Daily Telegraph |location=London| access-date= 31 January 2017 }} The scandal centred around Scourfield's use of his position to refer companies to Quayside Corporate Services, owned and operated by David Mills, for "turnaround" services which Quayside was unqualified to provide. Several members of Quayside's staff had criminal records for embezzlement. Customers were allegedly inappropriately pressured to take on excessive debt burdens and to make acquisitions benefiting Quayside.{{cite web|url=http://www.ianfraser.org/re-examining-hbos/|title=The BoS Reading scandal that just will not go away – Ian Fraser|access-date=15 June 2015|date=2010-10-02}}

On 30 January 2017, following a four-month trial, former HBOS employees Scourfield and Mark Dobson were convicted of corruption and fraud involving a scheme that cost the bank £245 million;{{cite news |last= Goodley |first= Simon |title= Cash, cruises and sex parties: inside ex-HBOS manager's £245m scam |url= https://www.theguardian.com/business/2017/jan/30/cash-cruises-sex-parties-hbos-manager-lynden-scourfield| date= 30 January 2017 |newspaper= The Guardian |location=London| access-date= 30 January 2017 }} Scourfield pleaded guilty to six counts including corruption, and Dobson was found guilty of counts including bribery, fraud and money laundering.{{cite news |last1= Verity |first1= Andy | last2= Lewis |first2= David| title= Former HBOS manager found guilty of corruption and fraud|url= https://www.bbc.co.uk/news/business-38772660| date= 30 January 2017|work= BBC News | access-date= 30 January 2017 }} The court also convicted David Mills, Michael Bancroft, Alison Mills, and John Cartwright for their parts in the conspiracy. On 2 February 2017, David Mills was jailed for 15 years, Scourfield for 11 years and three months, and Bancroft for 10 years. Dobson was sentenced to four and a half years, and Alison Mills and Cartwright were given three-and-a-half-year sentences for money laundering.{{cite web |url= https://www.bbc.co.uk/news/business-38842723|title= Ex-HBOS banker 'sold his soul for swag'|author= |date= 2 February 2017|website= BBC News Online |publisher= BBC | access-date= 2 February 2017 }} Following the convictions, the BBC reported:

"Businessmen Bancroft and Mills arranged sex parties, exotic foreign holidays, cash in brown envelopes and other favours for Scourfield between 2003 and 2007. In exchange for the bribes, Scourfield would require the bank's small business customers to use Quayside Corporate Services, the firm of consultants run by Mills and his wife Alison. Quayside purported to be turnaround consultants, offering business experience and expertise to help small business customers improve their fortunes, but far from helping turn businesses around, Mills and his associates were milking them for huge fees and using their relationship with the bank to bully business owners and strip them of their assets. In cash fees alone, according to prosecutors in the trial, £28 million went through the accounts of Mills, his wife and their associated companies. […] Mills and his associates used the bank's customers and the bank's money dishonestly to enrich themselves."

The police investigation, named Operation Hornet, was carried out by Thames Valley Police, whilst Anthony Stansfeld was PCC. When the trial ended, Mr Stansfeld made the following three observations. Firstly, the investigation took six years at a cost of £7m. Secondly, that a fraud of that size could not have taken place without either complicity or incompetence, or a lack of oversight. Lastly, that if Thames Valley Police had not taken on the case no one else would have, and the crime would not have been investigated.{{cite web|url=https://www.thamesvalley-pcc.gov.uk/news-and-events/thamesvalley-pcc-news/2017/01/operation-hornet-statement-from-police-and-crime-commissioner/|title=Operation Hornet: Statement from Police and Crime Commissioner |date=30 January 2017|work=Thames Valley Police & Crime Commissioner}}

The BBC added: "A decade on, HBOS's owner Lloyds Banking Group still has not acknowledged the full scale of the fraud - or offered to compensate its victims"; the broadcaster noted that the fraud was first discovered in 2007 by the bank's customers Nikki and Paul Turner, who used publicly available records to uncover it, but that after the Turners submitted their evidence to the bank it dismissed their claims and tried to repossess their home. Following the convictions, the background to the case was reported on BBC Radio Four's File on Four programme on 31 January 2017.{{cite episode| title= The Turnaround Game | series= File on Four| credits= Reporter: Andy Verity; Producer: David Lewis; Editor: Gail Champion | network= BBC| station= BBC Radio Four| url= http://www.bbc.co.uk/programmes/b08fg81w| airdate= 31 January 2017| access-date= 31 January 2017 }} Lloyds is taking a £100 million hit paying compensation to the victims.{{cite news|title= Lloyds to pay £100m to victims of HBOS Reading fraud as FCA reopens probe|url= https://www.telegraph.co.uk/business/2017/04/07/lloyds-pay-100m-victims-hbos-reading-fraud-fca-reopens-probe/| date= 7 April 2017|work= The Telegraph | access-date= 9 April 2017 }}

Noel Edmonds, a celebrity victim of the scam, reached a settlement with the bank in July 2019. Edmonds had argued that staff at the Reading branch had ruined his business, the Unique Group. Edmonds' campaign against Lloyds included attending the Lloyds 2018 AGM where he berated the board of directors from the floor.{{cite web | url=https://news.sky.com/story/shareholder-rebellion-against-lloyds-executive-pay-11384047 | title=Noel Edmonds told 'this isn't a show' as he gatecrashes Lloyds AGM }} In July 2022, insider.co.uk reported that Thames Valley Police has referred Noel Edmonds' case against Lloyds Banking Group to the CPS, following a criminal investigation into a former HBOS banker that led to the liquidation of the TV presenter's Unique Group of businesses.{{cite web | url=https://www.insider.co.uk/news/police-refer-noel-edmonds-case-27418303 | title=Police refer Noel Edmonds case against HBOS to the CPS | date=7 July 2022 }}

Dame Linda Dobbs is chairing an independent inquiry into the investigation and reporting of the fraud.{{cite news |title=Noel Edmonds reaches compensation deal with Lloyds over scam |url=https://www.bbc.co.uk/news/business-49138587 |access-date=30 July 2019 |publisher=BBC |date=27 July 2019}} This inquiry started in April 2017.{{Cite web|url=https://www.reuters.com/article/lloyds-compensation-idINL9N1D201F|title=Lloyds says ex-judge Linda Dobbs to review its handling of fraud case|date=26 April 2017|work=www.reuters.com}}

The HBOS Reading trial finished on 2 February 2017. In April 2017 Lloyds Banking Group (LBG) commissioned Professor Russell Griggs to oversee a compensation scheme for the victims of HBOS Reading. The scheme concluded all of the victims businesses would have failed despite the Reading fraud and therefore only awarded compensation for D&I (Distress and inconvenience) and nothing for D&C (Direct and consequential loss). In October 2018 SME Alliance (a not for profit organisation that supports and lobbies for victims of Bank misconduct) concluded the Griggs review was not fit for purpose and issued a complaint under the SM&CR to the FCA about the management of LBG in relation to the Griggs Review. SME Alliance also commissioned Jonathan Laidlaw QC to give an ‘Advice’ on the Griggs Review.{{Cite web|title=Jonathan Laidlaw QC's Advice|url=http://www.smealliance.org/1/post/2018/12/jonathan-laidlaw-qcs-advice.html|access-date=2021-03-22|website=SME ALLIANCE LTD|language=en}}

Laidlaw QC concluded the Griggs Review was “procedurally defective” and it referenced “LBG’s failure to adjust the scope of the Review following the public release of the Project Lord Turnbull Report{{Cite web|title=Draft report reveals allegations of serious bank malpractice|url=https://www.kevinhollinrake.org.uk/news/draft-report-reveals-allegations-serious-bank-malpractice|access-date=2021-03-22|website=Kevin Hollinrake|date=22 June 2018 |language=en}} is another important defect.” The Project Lord Turnbull Report was written by accountant Sally Masterton. She had worked for the bank from 1998, first under HBOS and then Lloyds. The report makes several serious allegations about HBOS and Lloyds management, the most important of which are that the Reading Fraud was deliberately concealed, and that the FSA was intentionally misled. Moreover, the report is highly critical of the auditors, KPMG. In section eight the report states, “KPMG have not only just been negligent but their direct involvement in a number of material malpractices and violations regarding HBOS is fundamental and exposes them to claims in relation to misconduct, serious dereliction of duty and breach of regulatory and statutory duties.” In 2013 Sally Masterton, a forensic accountant, provided information that was crucial to the police investigation into the Reading Fraud. Subsequently, Ms Masterton left the bank and brought a case for unfair constructive dismissal, which was settled in 2015.{{cite news|title=Lloyds:how HBOS whistleblower exposed failings in regulation|url=https://www.ft.com/content/2fb12910-264d-11e9-b329-c7e6ceb5ffdf/|date=12 March 2019|newspaper=Financial Times|url-access=subscription}}

In December 2018 Kevin Hollinrake MP, Co-chairman of the APPG on Fair Business Banking tabled a debate in Parliament on HBOS Reading and the Economic Secretary to the Treasury, John Glen MP, confirmed LBG would now fund an ‘Assurance’ review about the Griggs review, requested by the FCA.{{Cite web|title=HBOS Reading: Independent Review - Tuesday 18 December 2018 - Hansard - UK Parliament|url=https://hansard.parliament.uk/Commons/2018-12-18/debates/51504BA8-AAA2-4085-8A3B-E20BC57A748A/HBOSReadingIndependentReview|access-date=2021-03-22|website=hansard.parliament.uk|language=en}}

This led to a report by Sir Ross Cranston, a retired High Court Judge, in December 2019. Sir Ross accused LBG of “an unacceptable denial of responsibility” over its treatment of the HBOS Reading victims.{{Cite news|last=Hurley|first=James |title=Lloyds forced to reopen HBOS Reading fraud compensation scheme|newspaper=The Times|language=en|url=https://www.thetimes.com/business-money/economics/article/lloyds-forced-to-rerun-compensation-scheme-for-hbos-scandal-23m5vtzfj|access-date=2021-03-22|issn=0140-0460}} This resulted in questions from the FCA including: “We will also require LBG senior management to explain how and why the failings identified by Sir Ross occurred in the first place.”{{Cite web|date=2019-12-10|title=FCA response to the Cranston Review|url=https://www.fca.org.uk/news/statements/fca-response-cranston-review|access-date=2021-03-22|website=FCA|language=en}}

Between December 2019 and February / March 2020, Antonio Horta-Osorio, the CEO of LBG, met with many of the Reading victims promising he would now oversee the compensation process personally.{{Cite news|last=Mortimer|first=Rachel|date=10 December 2019|title=Lloyds apologises for unfair fraud redress|work=FT Adviser|url=https://www.ftadviser.com/your-industry/2019/12/10/lloyds-apologises-for-unfair-fraud-redress/}} Many victims have complained there has been no contact with Mr. Horta-Osorio, who is now allegedly leaving the Bank for a post at Credit Suisse, since May 2020.

In April 2020 the Foskett Panel was formed under retired High Court Judge, Sir David Foskett, to finally compensate the victims of HBOS Reading.https://lloyds-insurance.co.uk/globalassets/documents/media/press-releases/lloyds-banking-group/2020/re-review-panel-announcement.pdf{{Dead link|date=October 2022 |bot=InternetArchiveBot |fix-attempted=yes }} {{Bare URL PDF|date=September 2022}} The process continues and the Panel have confirmed it could take up to a further two years (2023) to compensate all the victims.

In December 2020, the APPG on Fair Business Banking submitted a formal complaint under the SM&CR to the FCA about the conduct of LBG in relation to their treatment of HBOS Reading victims including the Bank's refusal to support victims or to compensate them for the additional three-year delay caused by the failed Griggs Review.https://www.appgbanking.org.uk/wp-content/uploads/2021/01/APPG-letter-to-FCA-re-Lloyds-Complaint-.pdf {{Bare URL PDF|date=September 2022}}

Three of the six criminals convicted for the HBOS Reading crimes have now been released from jail with a fourth due to be released by the end of 2021{{Citation needed|date=May 2024}}.

HBOS conducted all its operations through three main businesses:

• Bank of Scotland plc
• HBOS Australia
• HBOS Insurance & Investment Group Limited

Bank of Scotland plc was the banking division of the HBOS group, and operated the following brands:

• Bank of Scotland
• Bank of Scotland Private Banking
• Bank of Scotland Treasury Services
• Bank of Scotland Business Banking
• Birmingham Midshires
• Halifax
• Capital Bank plc (Formally North west securities)
• AA Savings (the same brand also used Bank of Ireland for some accounts)
• Halifax Financial Services (Holdings) Ltd
• Halifax Investment Fund Managers Ltd
• Halifax Share Dealing Limited
• Halifax Unit Trust Management Ltd
• Intelligent Finance
• Sainsbury's Bank (50%) – holding sold to J Sainsbury plc on 31 January 2014.{{citation needed|date=June 2020}}
• The Mortgage Business (TMB)
• Blair, Oliver & Scott (Debt recovery)
• St James's Place Bank

• Banco Halifax Hispania – rebranded as Lloyds Bank International in 2010 and sold to Banco Sabadell in 2013.
• Bank of Scotland Corporate
• Bank of Scotland International – transferred to Lloyds TSB Offshore in 2012, which became Lloyds Bank International in 2013.
• Bank of Scotland Investment Services
• Bank of Scotland (Ireland), trading as Halifax since 2006 and closed down on 31 December 2010.
• Bank of Scotland, Amsterdam branch - trading as Lloyds Bank since 2013 (savings) and 2014 (mortgages).
• Bank of Scotland, Berlin branch

HBOS Australia was formed in 2004 to consolidate the group's holdings in Australia. It consisted of the following subsidiaries:

• Capital Finance Australia Limited
• BOS International Australia Ltd

On 8 October 2008, HBOS Australia sold its Bank of Western Australia and St Andrew's Australia Pty Ltd subsidiaries for approximately A$2bn to Commonwealth Bank of Australia.{{cite news|url=http://uk.reuters.com/article/innovationNews/idUKTRE4975XT20081008|archive-url=https://archive.today/20130201064401/http://uk.reuters.com/article/innovationNews/idUKTRE4975XT20081008|url-status=dead|archive-date=1 February 2013|title=Australia's CBA to buy HBOS's BankWest for $1.5 billion|agency=Reuters UK|access-date=15 June 2015|newspaper=Reuters|date=2008-10-08}}

The group's businesses in Australia were sold to Westpac in October 2013.{{cite news |date=11 October 2013 |title=Lloyds agrees to sell Australian assets to Westpac |url=https://www.bbc.co.uk/news/business-24487938 |publisher=BBC News |access-date=28 September 2014}}{{cite web |url=http://www.lloydsinternational.com.au/ |title=Lloyds International |year=2014 |publisher=Lloyds Banking Group |access-date=28 September 2014 |archive-url=https://web.archive.org/web/20140921042142/http://www.lloydsinternational.com.au/ |archive-date=21 September 2014 |url-status=dead |df=dmy-all }}

HBOS Insurance & Investment Group Limited manages the group's insurance and investment brands in the UK and Europe. It consisted of the following:

• St James's Place Capital (60%)
• Halifax General Insurance Services Ltd
• St Andrew's Group
• Clerical Medical

It also used to own UK investment manager Insight Investment Management Limited.{{cite press release

| title = Notification of major interest in shares

| publisher = Phorm Inc

| date = 2 October 2009

| url = http://www.iii.co.uk/investment/detail/?display=news&code=cotn:PHRM.L&action=article&articleid=7554666

| access-date = 2 October 2009 }} The Bank of New York Mellon acquired Insight in 2009.[https://www.theguardian.com/business/2009/aug/12/lloyds-banking-group-insight-investment-sale "Lloyds sells Insight Investment to Bank of New York Mellon"], The Guardian, London, 12 August 2009. Retrieved 25 April 2012.[https://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6016965/Lloyds-disposals-begin-with-235m-sale-of-Insight-to-BNY-Mellon.html "Lloyds disposals begin with £235m sale of Insight to BNY Mellon"], The Daily Telegraph, London, 12 August 2009. Retrieved 25 April 2012.[https://www.telegraph.co.uk/finance/newsbysector/epic/lloy/6014793/Lloyds-sells-Insight-to-Bank-of-New-York-Mellon.html "Lloyds sells Insight to Bank of New York Mellon"], The Daily Telegraph, London, 12 August 2009. Retrieved 25 April 2012.

{{Portal|Banks|Companies}}

• Museum on the Mound

{{Reflist|30em}}

• Alan Cameron, Bank of Scotland, 1695–1995: A Very Singular Institution, Mainstream Publishing (20 April 1995), {{ISBN|1-85158-691-1}}
• Peter Pugh, The Strength to Change: Transforming a Business for the 21st Century, Sponsored Publishing (29 October 1998), {{ISBN|0-670-88049-3}}

• [https://web.archive.org/web/20040604084145/http://www.hbosplc.com/home/home.asp Official website of HBOS plc] (now redirects to Lloyds Banking Group website)
• {{PM20|FID=co/010964|TEXT=Documents and clippings about|NAME=}}
• [https://www.dobbsreview.com Dobbs Review]

{{Lloyds Banking Group}}

{{2008 economic crisis}}

{{Authority control}}

{{DEFAULTSORT:Hbos}}

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Category:Companies based in Edinburgh

Category:British companies established in 2000

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Category:Lloyds Banking Group

Category:2001 establishments in the United Kingdom