HBOS, the mortgage giant rescued by Lloyds TSB after almost collapsing earlier this year, was chasing sales too aggressively and with little regard for risk as early as 2002, according to a former senior director.
Paul Moore, head of regulatory risk at the bank between 2002 and 2004, said: 'I think a concern everybody had [was] whether or not the business was under control.'
He claimed the bank’s priority was switched from risk management to growth under the former chief executive Sir James Crosby, who is now leading the Government’s review of the mortgage market. HBOS was rescued by Lloyds to prevent its collapse after the wholesale markets seized up in the wake of Lehman Brothers’ bankruptcy in September. Investors feared its wholesale funding requirement – a legacy of its growth years – was unsustainable.
In the five years between 2002 and 2007, the bank’s asset base almost doubled from £355bn to £666bn, with much of the growth funded from the wholesale market. In an interview on the BBC’s Money Programme, Mr Moore said the speed of growth reflected a new “premier sales and marketing culture”.