Ex-HBOS boss Colin Matthew urged to hand back pension

The spotlight has fallen on Colin Matthew, 62, after the bank’s former chief executive James Crosby last week decided to hand back his knighthood and one third of his pension.

Mr Matthew, who joined the Bank of Scotland from school aged 16, oversaw HBOS’s disastrous expansion in Ireland and Australia which has been identified as playing a major part in its collapse in 2008 when it was taken over by Lloyds with the support of the government.

While other senior executives have apologised, Mr Matthew, who once was an adviser to First Minister Alex Salmond and was head of the bank’s international wing, has not and left with a £678,000 pay-off and a pension pot worth just over £9 million.

The calls for him to hand back his pay-off and his gold plated pension follow the findings of the Banking Standards Commission which identified a “colossal failure of senior management and the board” and particularly Mr Matthew’s attempt at breaking into international markets.

Independent MSP Margo MacDonald has called for Mr Matthew to accept responsibility for his mistakes which saw the government forced to bail out the merged Lloyds and HBOS.

She said: “I think Colin Matthew should give this money back. But the fact he has not popped up like Sir James Crosby and offered to do the same, says all you need to know.

“These people should be truthful, we expect them to be responsible.

“These senior executives set the policy and they got it horribly wrong, whether that was by mistake or by very poor judgment. Is it reasonable that he should retain his pension? I don’t think so.

“I don’t think he should have a pension like that in the first place.

“He is more than happy to keep his side of the contract even though he has not been responsible, has made mistakes and has made poor decisions.

“I would like to see all these executives lose all of their benefits if they are found to be wholly, or mainly, responsible for the downfall of their bank.”

The government has refused to take action to force former executives of the bailed-out banks to pay their pensions back.

Last week, Prime Minister David Cameron said it was a “matter of conscience and judgment” whether other HBOS executives gave up all or part of their pensions.

Ray Perman, who wrote Hubris: How HBOS Wrecked the Best Bank in Britain, said the pay-off for Mr Matthew was “indefensible”.

He said: “I believe it would HBObe justifiable to trim their pensions, rather than cut them  completely.

“What I think is indefensible is the redundancy payments staff were handed at the end. They were called ‘change of control provisions’, which were intended for circumstances where banks were sold at a very high price and shareholders would take a share in their success.

“They certainly were not planned for situations where banks went bust and had to be saved.

“They were meant to be used as a reward for success, but instead they have been used as a reward for failure.”

Shadow Labour Treasury minister Cathy Jamieson, said: “Sir James Crosby was not the only senior executive at HBOS who made expensive mistakes, but he seems to be the only one who has shown any remorse for such reckless behaviour.

“It would appear many of the others who should be sharing responsibility for what happened at HBOS feel they got out in time. I fear we will be waiting a long time for them to do the decent thing in the way that James Crosby has.”