Peter Cummings, the HBOS banker whose division lent billions of pounds to property developers, has been given a lifetime ban by the Financial Services Authority for his role in the banking crisis.
Cummings, who has also been fined £500,000, is the only former HBOS banker to be penalised by the City regulator as a result of the near-collapse of the bank which was rescued by Lloyds in September 2008 - and the highest profile banker to be punished since the financial crisis.
The 57-year old Scottish banker launched a stinging attack on the regulator for not taking action against any of his former colleagues at the bank which eventually needed a £20bn taxpayer bail out.
Calling for an independent report into the HBOS collapse, Cummings, who retired with a £352,000 a year pension, said: "This is tokenism at its most sinister, and has made it feel throughout like institutional oppression".
The action against the retired banker, well known as a lender to Top Shop founder Sir Philip Green and other high profile business executives, follows the announcement by the FSA in March that the Bank of Scotland corporate division of HBOS which had run and which was found guilty of "very serious misconduct".
The FSA said it would begin work on finding out what went wrong at the bank - created in 2001 through the merger of Halifax and Bank of Scotland - and publish a report before it is disbanded in March next year.
Cummings, who retired in January 2009 following the Lloyds rescue after a career that began at Bank of Scotland when he was just 18, was found to have failed to "exercise due skill, care and diligence" in running the corporate banking division and failed to manage "high value transactions" as they showed signed of stress as the banking crisis took hold.
A softly spoken Glaswegian, Cummings' first job was said to be making tea in his local Dumbarton branch. It was not until January 2006 that he was promoted to main board level when Sir James Crosby was still chief executive of HBOS. Crosby handed the helm to Andy Hornby, now boss of Coral, in July 2006 while Lord Stevenson was chairman of the bank during the period.
Bank of Scotland corporate division became well known as a lender to property companies but also taking equity stakes in companies such as retirement-home builder McCarthy & Stone, and housebuilder Crest Nicholson. It helped fund Green's ill-fated tilt at Marks & Spencer in 2004.
The division kept expanding in the months running up to the financial crisis, even as rivals were pulling back - and the FSA, in a 92-page final notice, argued that Cummings should have restrained the business which operated "with a culture of optimism" with bonuses linked to sales. The investigation covered the three years starting in early 2006 and ended in December 2008, just as Lloyds was taking control of HBOS. Shortly afterwards, in February 2009, the enlarged bank, known as Lloyds Banking Group and 40% owned by the taxpayer, was forced to increase the level of bad debt provision to £7bn from £3.3bn in December because HBOS had taken an "optimistic" approach to provisioning.
In March, the regulator said it did not fine HBOS because the bill would have been picked up the taxpayer.
Explaining he was not taking the FSA to a tribunal because of the cost and impact on his family, Cummings said: "Many people must bear collective responsibility for what happened, including governments and regulators as well as the boards of the banks themselves. But the fact that I am the only individual from HBOS to face investigation defies comprehension". The FSA said it had taken into account the fact had waived a £1.3m bonus when he left.
There has been speculation that Cummings had originally faced a £1m fine from the FSA which has been under fire for its handling of the financial crisis.
It closed its investigation in to what went wrong at Royal Bank of Scotland without taking action against Fred Goodwin, the former chief executive who has since been stripped of his knighthood. Johnny Cameron, the former head of investment banking at RBS, agreed not to work in the City again although no regulatory action was taken against him.
Rise in bad debts
Peter Cummings, the former boss of the Bank of Scotland corporate division inside HBOS, was found by the FSA to have a led a "culture of optimism" which led to the bank being slow to notice a rise in bad debts.
While the FSA admitted that some of the problems existed before Cummings took over and other directors shared responsibility, it said the bank allowed too many big loans to a small number of borrowers and that the full extent of the bad debts inside the corporate division were not immediately clear to the board, its auditors or regulators.
The FSA noted that the corporate division took on risk by taking on 100% exposure to loans which it then sold down rather than trying to join in a club with other banks to reduce the risk.
