Former HBOS boss Andy Hornby to take charge of public company

Roulette Wheel

Andy Hornby, the former boss of failed bank HBOS, will secure a senior role in the gambling business formed from the merger of Ladbrokes and Gala Coral, putting pressure on City regulators to publish a long-awaited report on his role in the mortgage lender’s implosion.

Hornby is to be appointed chief operating officer of the whole group and will pick up a large bonus following the merger, which is expected to be announced on Friday after more than a month of talks.

The deal will be structured as a takeover of publicly traded Ladbrokes by Coral, which is owned by private equity firms. The combined company is expected to apply to list its shares on the London Stock Exchange.

Shares in Ladbrokes have risen by almost a third since May, though have declined from147p in June, when news of the talks first emerged, to 128p on Thursday.

The merged company will control nearly 4,000 betting shops while its main competitor on the high street, William Hill, has about 2,300. But the effective duopoly, with both firms controlling about 70% of the UK’s 9,000 total, is not expected to trigger a competition review.

A similar merger proposal was filed by the firms in 1998 only to be ruled out by former business secretary Peter Mandelson, who said a tie-up was not in the interests of customers. But that ruling was made long before internet gambling exploded, allowing many other entrants to take a slice of a much bigger market.

Ladbrokes was until recently accused of failing to embrace the internet with the same enthusiasm as its rivals, allowing William Hill and younger firms such as Paddy Power and bet365 to win market share.

Last month, Jim Mullen, who was appointed four months ago as chief executive to shake up Ladbrokes, said his focus “has been on a more aggressive plan to build digital scale and grow our recreational customer base across all channels”.

He added that a merger with Gala Coral “could create a combined business with significant scale and has the potential to generate substantial cost synergies, creating value for both companies’ shareholders.”

As chief executive of HBOS, Hornby was in charge in 2008 when the lender was taken over by Lloyds bank in a shotgun merger designed to save it from going bust. The deal, which was waived through by the Treasury, was cited as one of the main reasons that Lloyds was later partly nationalised.

A report on the conduct of the HBOS board directors, including Hornby, has suffered a series of delays, which have been blamed on the time taken for those named in the report to make their own comments.

Hornby is under the spotlight alongside fellow directors, Lord Stevenson and James Crosby, following accusations that they failed to act promptly to save the institution, which owned Halifax and the Bank of Scotland, from near collapse.

It is known that shareholders have told senior directors at Ladbrokes and Gala Coral that Hornby should be kept off the board until the report is published.

Hornby has already been fiercely criticised in a report from Britain’s influential Banking Commission last week which called for all three men to be barred from the City for their role in HBOS’s collapse.

If found negligent by the investigation, Hornby could also be barred by the business secretary Sajid Javid as a company director.

The companies refused to comment on the deal.

Powered by Guardian.co.ukThis article was written by Phillip Inman, for theguardian.com on Thursday 23rd July 2015 20.26 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010

 

JefferiesAnd the Best Place to Work in the global financial markets 2017 is...

Register for Financial Markets News Alerts