HBOS chief James Crosby under fire

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hbos chief james crosby under fire

Sir James Crosby, the former head of the Halifax Bank of Scotland (HBOS) and now the Chair of the committee advising on the Special Liquidity Scheme is under pressure from on lookers. The Special Liquidity Scheme was created to help bring some much needed liquidity into the banking system. Crosby was asked by the Government in April 2008 to create a report into the mortgage market. The report is expected to be released in early October 2008.

Much of the problems that Halifax Bank of Scotland (HBOS) is currently facing are being directly linked to the strategy that Sir James Crosby and his board, at Halifax Bank of Scotland (HBOS), implemented while he was their Chief Executive.

Member of the Scottish Parliament for Edinburgh, Margo McDonald has written to Allistair Darling, the Chancellor of the Exchequer, asking him to reconsider the tenure of Sir James Crosby as the lead on the report. She also asks in her letter, for the Chancellor to reconsider the position of Crosby as Deputy Chair of the Financial Services Authority (the FSA).

"It is becoming clearer that it was the strategy of HBOS which led to its own demise - not simply the spivs and speculators' who brought it down,” wrote MSP Margo McDonald.

Crosby was the head of the Halifax and subsequently appointed Chief Executive of the newly formed Halifax Bank of Scotland when the Halifax and the Bank of Scotland merged in 2001.

Banking Auditors, KPMG, stated that the banks attitude to risk (being risk preferring) was instigated by their Board of Directors. Whist implementing this strategy at HBOS, there was a lot of turn around at the top; both the Head of Retail, Benny Higgins, and the Finance Director, Phil Hodkinson, left their respective positions on the board during this period, with the later lasting little over a year.

MacDonald said: "Thousands of people in Scotland are struggling with their home loans. I'm asking the Chancellor if there is not a conflict of interest here that the person who has instigated such a disaster for HBOS - which has had such a large market share - is being asked to give his expert advice;" Margo McDonald referred to Crosby’s lead on the report into the mortgage industry.

She also questioned the fact that Crosby held the Deputy Chairman (whilst a non-executive position) position at the Financial Services Authority (the FSA) whilst he was the Chief Executive at the Halifax Bank of Scotland.

About Halifax Bank of Scotland (HBOS)

Halifax Bank of Scotland (HBOS) is a giant UK banking institution. The group was formed in 2001 through the then, much talked about, merger of Halifax and the Bank of Scotland. The banking group provides a range of services including commercial, retail and business banking services across the UK. Over 70 thousand staff are employed across the banks’ network of branches, at their head office, call centres and processing offices.

About the Special Liquidity Scheme (SLS)

The Special Liquidity Scheme was introduced by the Bank of England to enable banks to swap liquid assets for treasury bills. The scheme was introduced due to the lack of liquidity in the banking system; one of the primary factors which is hindering the financial sector. The scheme has brought some much needed liquidity back into the banking system but its future was uncertain; thus the Crosby Report was commissioned.