Don’t blame me for HBOS fiasco, I was just working part-time… says ex-boss paid 815,000: Former bank chairman is blasted by MPs and peers
Lord Stevenson says reckless lending not his fault as 'only there part time'Politicians accused him of 'living in cloud cuckoo land' and showed him damning letter in which he admitted being legally responsible for business
12:15 GMT, 5 December 2012
Grilling: Lord and Lady Stevenson pictured. Former chairman of HBOS Lord Stevenson infuriated MPs by saying reckless lending was not his fault
The former chairman of HBOS yesterday washed his hands of blame for the bank’s collapse.
Lord Stevenson, who earned 815,000 a year in pay and perks, infuriated MPs and peers by saying reckless lending was not his fault because he was ‘only there part-time’.
The politicians accused him of ‘living in cloud cuckoo land’ and showed him a damning letter in which he had admitted he was legally responsible for the business.
He is the latest HBOS executive to be hauled in front the Parliamentary commission on banking standards and was questioned for more than three hours yesterday.
The Scottish-born businessman, described as one of the forgotten men at the centre of the financial crisis, was chairman of HBOS from May 2001 until its downfall seven years later.
He had close links to the New Labour government and is a friend of former spin chief Lord Mandelson.
His marathon testimony – in which he appeared increasingly rattled and started to lose his voice – was described as ‘evasive, unrealistic and repetitive’.
Lord Lawson, the former chancellor, accused his fellow peer of having a selective memory when he repeatedly claimed to have forgotten key details.
Once Britain’s biggest mortgage provider, HBOS was rescued by Lloyds in September 2008 after a reckless lending spree that lasted for most of the last decade.
But the toxic loans on HBOS’s books crippled Lloyds, triggering a 20billion bailout from taxpayers several weeks later.
Lord Stevenson repeatedly rejected suggestions from the banking commission’s chairman that the loans were ‘incompetent’.
He said: ‘There was a lot of mistaken lending. I wasn’t there in the trenches with the people making the decisions – I was only there at the most part-time.’
He then conceded that the bank’s top brass ‘missed a trick’ in its corporate lending division.
This remark infuriated Andrew Tyrie, chairman of the commission, who pointed out that 26billion – roughly two-thirds of the amount businesses pay in corporation tax each year – had ‘gone down the Swannee’.
The Tory MP added: ‘Millions have lost out on what they thought they’d get for their pensions. Almost three million shareholders have almost been wiped out – and taxpayers are going to be paying for this for a very long time.’
Lord Stevenson tried to retract his comment by replacing ‘missed a trick’ with ‘missed an avalanche’.
Toxic loans on HBOS's books crippled Lloyds, pictured, which rescued HBOS in 2008, triggering a 20billion bailout from taxpayers
Mr Tyrie brandished a letter Lord Stevenson wrote to the Financial Services Authority in January 2008, a few months before HBOS was swallowed up by Lloyds.
In it he had written: ‘I can understand a mindset which regards a “non executive chairman” as sailing above the battle, not concerned with the detailed day-to-day realities. Can I make it plain that I do not regard myself as that kind of chairman.
‘I am legally responsible for the business and with the modesty for which I am not famous regard myself as being knowledgeable and well briefed.’
Lord Stevenson had close links to the New Labour government and is a friend of former spin chief Lord Mandelson, pictured
Yesterday he insisted his biggest mistake was failing to anticipate the credit crunch, when banks were starved of funds because they had become nervous about lending to each other.
But Lord Lawson, chancellor to Margaret Thatcher and father of TV chef Nigella, said: ‘You are living in cloud cuckoo land. You were responsible for a strategy of reckless growth and that is what led you into difficulties.
‘When the details seem to suit your
defence they appear to miraculously pop back into your memory.’
Stevenson’s lack of contrition angered Justin Welby, the Archbishop of
Canterbury-elect. He said he was ‘baffled’ by the inability to recognise
the ‘complete failure of culture and strategy’ which ‘led to a bank
being wiped out’.
Referring to Lord Stevenson’s insistence on blaming the credit crunch for the collapse of HBOS, the church leader said: ‘It is like someone who has a fatal heart attack at home and is in a car crash on the way to hospital. And the car crash is then blamed as the cause of death.’
Lord Stevenson responded: ‘We were not aware until late in 2008 that we were suffering from a heart attack.’ The showdown came the day after former HBOS chief executive Sir James Crosby apologised for the first time for the collapse and said he was ‘horrified’ by the misery inflicted on taxpayers and ex-colleagues.
But he sparked further controversy by admitting he had sold two-thirds of his shares in the two years before the financial crisis.
Lord Stevenson’s apology came only at the end of his long testimony. He said: ‘I am extremely sorry it happened. I am extremely sorry that employees got hit, taxpayers got hit and shareholders got hit. There are few days when I don’t think about this.’
Taxpayers are sitting on a 7.5billion paper loss on the Lloyds shares bought by the Government. Meanwhile millions of investors and pension savers have seen their nest eggs destroyed.
Lloyds has been forced to write off almost 50billion in bad loans made by HBOS – twice as much as any other bank, including Royal Bank of Scotland.
This includes 26billion in risky loans to businesses and property entrepreneurs made by the bank’s corporate lending division.
Peter Cummings, who ran the operation, remains the only HBOS executive to be punished. In September, the Financial Services Authority fined him 500,000 and imposed a lifetime ban on his working in the City.
Boss Sir James Crosby sold out before crash
'Upset': Sir James Crosby sold off two-thirds of his shares before the lender followed
The man who ran HBOS sold off two-thirds of his shares before the lender folded.
Sir James Crosby made the admission in a humiliating appearance before the Parliamentary banking commission.
The shares were cashed in in the two years before the bank failed in 2008.
Andrew Tyrie, the Tory MP who chairs the commission, told him: ‘You managed to get out before the crash – you sold two-thirds of your shares’.
Sir James, chief executive from 2001 to 2006, replied: ‘In effect yes – but not knowingly. I was essentially balancing my portfolio of assets.’
Mr Tyrie countered: ‘You sold two-thirds of your holdings at a time when messages were getting increasingly strident about the company you just left … you were busy bailing out of it.’
The disgraced banker, who went on to become deputy chairman of the City watchdog, also faced calls to give up his knighthood as he admitted ‘incompetent lending’ led to the collapse of HBOS.
Forced to account for his actions for the first time on Monday, he told the Parliamentary commission on banking standards he was ‘horrified’ by what happened to colleagues and taxpayers.
Asked what he was apologising for, he responded: ‘I’m apologising for the fact that I played a major part in building a business that failed.’
He added: ‘I wasn’t there for the last few years but it would be wrong to disassociate myself from what happened.
‘I was horrified and deeply upset by what happened – it was hugely distressing to see what happened to shareholders, colleagues and taxpayers.’
He walked away from HBOS with a 572,000 retirement income, having accumulated more than 8million in bonuses in his last five years.