Posts Tagged ‘Lloyds TSB’
HBOS’s problems were home-grown
“Blame the hedge funds and short traders” they cry.
Of course, greedy, competitive individuals will always rake in the dosh wherever they can – that’s nothing new. Short selling has been around since at least the seventeenth century.
But who gave them the opportunity? Governments who allowed the housing boom and the credit bubble. And company managers who got greedy, borrowed too much on the wholesale markets rather than from their own depositors and then lent too much to borrowers.
That was Northern Rock, of course, but HBOS wasn’t far behind – nearly half of its lending was financed by its own borrowing rather than depositors’ funds.
Then consider that a third of HBOS’ mortgage customers were allowed to borrow more than 80% of the value of their homes.
Why? Because it led to rapid growth, good profitability – while the music played, at least – and, of course, it justified their inflated salaries and bonuses.
So no co-incidence that HBOS’s corporate banking chief, Peter Cummings, was one of the best paid banking directors last year, taking home £2.61m. Benny Higgins, the former head of the retail division who left last year, received £2.31m in pay and compensation.
And as his bank crashes around his ears, Andy Hornby, HBOS chief executive, slides off to receive shares worth almost £2 million in Lloyds TSB following yesterday’s emergency takeover.
Meanwhile thousands will lose their jobs and most of HBOS shareholders will be pretty much wiped out.
Nice one boys. But don’t blame everyone else. I’d just keep very quiet if I was you.
Phillip Oppenheim
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