Ex-HBOS chief fined record £500k by City watchdog and banned from top banking jobs

A FORMER executive at HBOS has been fined a record £500,000 and banned from senior banking posts for life by a City watchdog.

The Financial Services Authority said Peter Cummings – who reportedly left HBOS with a £660,000 pay-off and a £6 million pension pot – had failed to exercise enough care and attention in his corporate banking division while it pursued an aggressive expansion strategy.

Mr Cummings was behind many of the bank’s high-profile deals before it collapsed and was bailed out by the taxpayer.

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He has been blamed for the £7 billion of bad corporate loans unveiled by HBOS last month.

The sanctions against him follow the announcement by the FSA in March that the Bank of Scotland corporate division had been guilty of “very serious misconduct”.

Mr Cummings was accused by the FSA of presiding over a “culture of optimism” which affected the corporate division’s judgment about debt.

Tracey McDermott, the FSA’s director of enforcement and financial crime, said: “Despite being aware of the weaknesses in his division and growing problems in the economy, Cummings presided over a culture of aggressive growth without the controls in place to manage the risks associated with that strategy. Instead of reacting to the worsening environment, he raised his targets as other banks pulled out of the same markets.”

The announcement of the fine and ban imposed on Mr Cummings paves the way for a report by the FSA into the cause of the HBOS failure in 2008 when it required the taxpayer-funded bailout and was bought by fellow bank Lloyds.

Mr Cummings, 57, is the only man to be penalised by the FSA over the HBOS collapse. He said he rejected the FSA decision “in its entirety”.

He said: “For the past three and a half years I have been singled out and subjected to an extraordinary Orwellian process by an organisation that acts as lawmaker, judge, jury, appeal court and executioner. Many people must bear collective responsibility for what happened, including governments and regulators as well as the boards of the banks themselves.

“The decision to single me out for investigation is even more grotesque given that even the FSA has to admit in its notice that other senior people were involved in the critical decisions for which I am taken to task. This has made it feel throughout like institutional oppression.”