Three former directors of HBOS could be banned from serving as company directors after business secretary Vince Cable asked civil servants to consider whether those responsible for the bank's collapse in 2008 deserve to be disqualified.
Sir James Crosby, Lord Stevenson and Andy Hornby were all heavily criticised last week in an official report into HBOS, which was rescued by Lloyds Bank after the financial crisis struck. Cable, who is said to be "outraged" by the affair, has asked officials to consider whether there are grounds to launch proceedings against the trio.
"The business secretary has asked his officials to look into the powers available to us and the evidence about how HBOS was run," said an adviser to Cable. The move could potentially lead to disqualification proceedings being brought against Crosby, who was chief executive of HBOS until 2006, his successor Hornby, and Stevenson who chaired the company from 2001 until it became part of Lloyds Banking Group.
Officials at Cable's Department for Business, Innovation and Skills will consider whether Crosby, Hornby and Stevenson met the "fit and proper persons" test to operate as directors in Britain.
"The UK has very high standards, and it's important that the business code is upheld, said Cable's adviser. "Vince is outraged by what happened".
Last Friday the parliamentary commission on banking standards published an official report into the collapse of HBOS. It was deeply critical of all three men, saying their "toxic" mistakes had led to the "colossal failure" of the bank, which racked up £47bn of losses.
Andrew Tyrie, the Conservative MP who chairs the commission, also suggested that further sanctions could be needed, saying "Those responsible for bank failures should be held more directly accountable for their actions and face sanction."
Last Friday Crosby stepped down from a position of adviser to the private equity firm Bridgepoint. He remains senior non-executive director at catering group Compass, which continues to decline to comment on the issue. It is understood that Compass does not feel the HBOS debacle is relevent to Crosby's position on its board.
Hornby was appointed chief executive of the bookmaker Coral in July 2011, and is a member of Gala Coral Group's board. The privately owned company continues to stand by him.
"Andy is doing a good job, and the business is performing extremely well," said a Gala Coral spokesman. "He has the complete support of the board and the business."
Crosby's pension pot is also under scrutiny, with the Sunday Times reporting that it has swollen to more than £20m. He was entitled to an index-linked pension of £570,000 a year, which could now be worth about £700,000 given inflation since 2006.
In contrast Fred Goodwin, the former boss of Royal Bank of Scotland, had his own pension halved to £340,000 a year after a public outcry. Goodwin was also stripped of his knighthood.
The parliamentary commission on banking standards concluded that HBOS's reckless lending meant the company would have collapsed even without the trauma of the financial crisis. MPs slated its business strategy, and the supervision of the HBOS board.
Peter Cummings remains the only former HBOS director to have been penalised by the Financial Services Authority. Last autumn he was fined £500,000 and banned for life from working in the City.
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