* Extensive work already done on review
* HBOS had to be rescued in financial crisis
(Adds more detail, background)
By Huw Jones
LONDON, July 11 The long-running review into why
HBOS bank failed will be published by the end of the year now
that disciplinary proceedings linked to its collapse have
concluded, British financial regulators said on Friday.
HBOS, Britain's biggest mortgage lender, had to be rescued
at the height of the financial crisis in 2008 with a
government-engineered takeover by rival Lloyds, which
subsequently needed a 20 billion pound ($34 billion) bailout to
The Financial Conduct Authority and the Bank of England said
extensive work has already been done on the review, which will
summarise why HBOS failed and make any recommendations on how to
avoid future collapses.
"The aim is to publish the final report by the end of this
year," the two regulators said in a statement.
They published the final terms of reference for the review
that will be used for so-called Maxwellisation over coming
months. This refers to the process whereby people criticised in
the review have a right of reply before publication.
External independent reviewers have been agreed with
parliament's Treasury Select Committee.
"This approach will provide independent scrutiny and
challenge to facilitate the production of a robust report," the
terms of reference said.
Andrew Green, a senior independent lawyer, will write the
section that assesses the regulator's enforcement
The regulators had to wait for enforcement proceedings
against Peter Cummings, the head of corporate lending at HBOS
until it was rescued by Lloyds, to be completed before work on
the review could start.
Cummings, the only HBOS official to face proceedings, was
fined half a million pounds and given a lifetime industry ban in
2012, a ruling he called unfair and sinister.
More former HBOS executives may be brought to book.
The review will offer an opinion "as to whether the
regulators should consider afresh whether any other former
members of HBOS's senior management should be subject to an
investigation with a view to prohibition proceedings".
A parliamentary commission on banking standards said last
year that HBOS was an accident waiting to happen with bad
lending and losses across the business likely to have led to its
insolvency even without the funding and liquidity problems
during the 2007-09 financial crisis.
Andrew Tyrie, who chairs the treasury committee, said
parliament will check if the review is independent enough to
reassure the public that the regulators will not pull their
punches on the failures of their predecessors.
Although regulators bore some of the blame, primary
responsibility for the "colossal failure" lay with Dennis
Stevenson, chairman from the formation of HBOS in 2001 until its
collapse, and former chief executives James Crosby and Andy
Hornby, the parliamentary report said.
The lawmakers asked regulators to consider if Stevenson,
Crosby and Hornby should be barred from the industry.
Last year Hornby surrendered 30 percent of his pension from
HBOS and asked the UK authorities to remove the knighthood he
received just after he left the bank.
($1 = 0.5877 British Pounds)
($1 = 0.5877 British Pounds)
(Reporting by Huw Jones; editing by Jane Merriman and Keiron