Disgraced banker brands punishment ‘sinister and curious’

Peter Cummings
Peter Cummings
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DISGRACED banker Peter Cummings has branded as “sinister and curious” the record £500,000 fine and lifetime ban handed out to him by Britain’s financial regulator for his role in the collapse of HBOS.

At a private session before the Parliamentary panel on banking standards, Mr Cummings said he felt singled out as the only banking director or official against whom the Financial Services Authority (FSA) had taken action.

“It is unfair, and it also seems a bit sinister,” the former head of HBOS’s corporate lending division said.

“We are not the only failed bank. There are at least four or five of them, and I find it curious that I was singled out.

“So someone, somewhere decided that that was the appropriate action to be taken, and it is the best part of four years later.”

He added: “I think it is sinister and curious.”

Mr Cummings refused to blame any individual for HBOS’s failure and subsequent fall into the arms of rival Lloyds, involving a £17 billion taxpayer bailout.

He said: “I am absolutely heartbroken about what happened, and I live with it every day, but it would be inappropriate of me to point the finger at any colleague. I have not done it to the FSA, and I am certainly not going to do it to a parliamentary commission.”

But he admitted he was “bewildered” when Rory Phillips, the panel’s QC, suggested that “it seems, frankly, impossible, doesn’t it, that the entire banking crisis could be attributed – as the FSA’s enforcement actions suggest – to the activities of one director in one bank?”

Other leading main board directors at HBOS have been sharply criticised at recent Parliamentary commission hearings, including former chief executives James Crosby and Andy Hornby, and former chairman Lord Stevenson.

In his heydey of corporate lending, Mr Cummings numbered retail billionaires such as Scot Sir Tom Hunter and Sir Philip Green among his clients.

But the bank, which also took big equity stakes in a number of the corporates it backed, came unstuck when the wholesale money markets – on which it overwhelmingly depended for funding – froze in 2007.

Mr Cummings also hit out at the FSA’s allegation in its September judgment against him that there was a wrong-headed “culture of optimism” in HBOS’s corporate division as it aggressively expanded its real estate and private equity lending while asset values plunged.

But Mr Cummings rejected a suggestion by Mr Phillips that he was “hoping that something would turn up”.

Mr Cummings, whose evidence was heard in private on 27 November because of his ill-health, but whose transcript was only made available yesterday, said: “I watched a train crash for nine months and could not do anything about it – I was a spectator of world events that I could not control.”