We are now five years down the line from the banking crisis. The world has changed immeasurably in that time but the damage done by the recklessness in the boardrooms at RBS, HBOS and others continues to haunt our economy.
That is why I disagree with calls to simply move on and let sleeping dogs lie.
The people and the organisations which brought the UK economy to its knees should be investigated and should be subject to penalties both financial and reputational.
But more importantly, the reasons that such City behemoths were brought crashing down have to be identified and lessons learned to ensure the same sorry cycle simply cannot happen again.
Last week the Banking Standards Commission released its report entitled An Accident Waiting to Happen into the calamity that befell HBOS.
The report rightly lambasted former bosses Andy Hornby, Lord Stevenson and Sir James Crosby who has now asked for his own knighthood to be rescinded for their collective “collosal failure” as they attempted to steer the bank through choppy economic waters.
On their watch the figures stacked up like this reckless lending losses of £46 billion, a 96% drop in shareholder value and thousands of jobs lost.
HBOS was only kept alive thanks to a £20.5bn taxpayer bailout package.
But in years to come, future executives sitting in the same seats as the HBOS Three would perhaps do better to keep in mind how the bank’s downfall actually came about rather than the consequences of what happened in its aftermath.
The “seeds of destruction” were sown in 2001 in the wake of the ill-fated merger between Halifax and the Bank of Scotland.
Executives set aside the traditional central tenet of banking a prudent attitude to lending and borrowing and set out to grow as quickly as possible.
Instead of using savers’ deposits, HBOS grew reliant on wholesale funding to drive their aspirations but when cash dried up as banks stopped lending to each other the strategy began to crumble.
It was then that inflated ego and hubris took over with HBOS staff erroneously believing that they somehow possessed skills which others in the sector simply did not have access too.
Arrogance told them they would prevail even while the sands were shifting beneath their feet.
The industry watchdog had opportunities to intervene and stop the madness but nothing effective was done.
The regulator has since been scrapped for the part it failed to play in the City’s collective downfall.
Lord Turnbull, the lead member of the Banking Commission’s Panel on HBOS, summed up the bank’s fall this way: “In 2001, two well-established organisations were brought together with a combined market capitalisation of around £30 billion.
“Just seven years later all that value had been destroyed. This is a story of a retail and commercial bank, rather than an investment bank, brought down by ill-judged lending, poor risk control and inadequate liquidity. Its strategy was flawed from the start.”
For any good to come from the banking crisis, those words of warning should not only be heeded but repeated continually in the corridors of powers within our major financial institutions as time goes on.
The UK simply cannot afford for its banks to pursue boom and bust policies without regard for the inevitable consequences.Thatcher made her markThe death of Baroness Thatcher has reopened the simmering debate on the effect of her economic policies.
Denationalisation or privatisation as many more people would come to know it was central to her vision of a modern enterprising Britain.
When she swept to power, around 10% of UK GDP was accounted for by the nationalised industries.
She believed that businesses needed to be free to manage themselves and live or die on their own merits.
Her privatisation programme started off relatively small but during her years in office more than 50 companies were sold off in total, transforming the energy, telecoms, rail and water industries.
However, her longest shadow may have been cast with her battles with the UK’s trades union movement and her violent stand-off with the miners.
Her legacy both good and bad will continue to be felt for years to come.