Peter Cummings Fined £500K

The FSA has fined former HBOS director Peter Cummings £500K, and banned him for life from working in the City.

Tracey McDermott, director of enforcement and financial crime at the FSA is quoted in the Telegraph:

“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." 

However, do not shed too many tears for Cummings, Cummings left HBOS in 2009 with a payout of £600K; so he's still £100K up on the deal!

Lloyds Shares Continue To Fall

Shares in Lloyds Banking Group fell further this morning (to around 54p) as investors digested the shock news released by Lloyds in the middle of Friday that their newly acquired bank, HBOS, lost £10BN.

The size of the loss and timing of the announcement was unexpected, and has raised fears that Lloyds will require a sizeable injection of capital from the government, ie nationalisation (the government already has a 43% stake in it).

It seems that HBOS continued to lend/invest in property deals long after other banks had stopped doing so. The person in charge of the division that squandered the money, Peter Cummings, left in January with a payout of £600K.

The added irony of this worse than worthless performance is that the CEO of Lloyds, Eric Daniels, only a few days ago had told the Treasury Select Committee that the acquisition of HBOS was "strategically a very good acquisition and will prove to be so in a couple of years".

Maybe so, but should he not have tempered his enthusiastic comments with a warning about the loss that they were due to report?

Surely Daniels knew about the loss at that stage?