HBOS’ Cummings gets life ban and £500,000 fine September 12, 2012 4:59 pmPeter Cummings, a top banker at the heart of collapsed lender HBOS, has been fined £500,000 and banned from working in the City for life, in one of the first major enforcement actions to arise from the financial crisis.
The Financial Services Authority (FSA) plans to announce its action against Mr Cummings, former head of corporate lending, on Thursday, people close to the matter said.
He is the first top UK banking executive to face fines for actions contributing to the collapse of a financial institution during the 2008 meltdown.
Last March, the watchdog censured the failed lender for “serious misconduct” and singled out the corporate division’s “aggressive growth strategy” for particular criticism.
At that time, FSA declined to fine the bank, which was merged into Lloyds Banking Group and then required a government rescue in 2008, saying it would force taxpayers to pay twice.
But the watchdog promised that enforcement cases against individuals would follow. Spokesmen for the FSA and Lloyds declined to comment.
As head of corporate banking at HBOS from 2006 to 2008, Mr Cummings was responsible for one of the bank’s fastest periods of growth at the bank – quickly followed by an equally rapid demise. Aggressive lending practices at the business he ran triggered huge losses when corporate real estate prices crashed and forced HBOS into a rescue takeover by Lloyds TSB in 2008.
Mr Cummings was well known for courting rich and famous clients – including Sir Philip Green, Sir Tom Hunter and property magnate Nick Leslau – but people who know him well say he remained true to his roots, keeping the modest Scottish home he has lived in with his wife for years.
They say the banker, who has long denied any culpability for the collapse of HBOS, was badly scarred by its failure. Mr Cummings initially fought the FSA’s attempts to fine him but has declined to take his case to the tribunal that hears appeals from the watchdog’s decisions. He could not be reached for comment on Wednesday.
The FSA has closed its investigation of Royal Bank of Scotland without bringing charges. Three former Northern Rock executives were fined for underreporting mortgage arrears, but the watchdog has said the misreporting was not central to that bank’s insolvency.
Source; http://www.ft.com/cms/s/0/27905194-fceb ... z26HHrxr2N
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