HBOS chiefs pressured auditors over bad loans
The bosses of HBOS, the mortgage vendors who were bailed out during the 2008 banking farce, reportedly put pressure on auditors to sign off lower bad loan provisions, so they could reduce concerns about their financial wellbeing. This is according to an official probe, which will wrap up this week.
Sky News can reveal that a report to be published on Thursday will make the explosive allegation that HBOS executives leant on KPMG to approve their own analysis of impairment charges, despite the audit firm taking a more pessimistic view about the bank's balance sheet.
The news that auditors were being leaned on in such a manner is only going to see more action against certain business, which could end up seeing former HBOS board members being banned from ever working in the financial services sector again.
Sky News reports that the bank's former bosses had tried to persuade KPMG to adjust its view of the level of provisioning required, which will be revealed in the report by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA). There's going to be a lot of fingers being wagged at former chief execs James Crosby and Andy Hornby, and former chairman, Lord Stevenson. Will enough be done to discourage others though? Don't hold your breath.
Of course, regulators can't fine any of the former executives, even if they are viewed as being culpable, thanks to a six-year statute of limitations, which has now expired. How very, very convenient. As such, the Financial Services Authority (FSA) will also be getting it in the neck, as they were supposed to be keeping an eye on all the banks.
"There is now a reasonable prospect that the public will at least have an opportunity for a full explanation of this catastrophic failure," Andrew Tyrie, the Treasury committee chairman, said this week. "The work of the advisers can give Parliament and the public more confidence that the role of the FSA, in the failure of HBOS, will have been fully disclosed."