‘Wonder kid’ who failed to but brakes on risk-takers

The Parliamentary Commission on Banking Standards said the Scarborough-born high-flyer “proved unwilling or unable” to change the direction in which HBOS was headed after taking control of the bank in 2006 from his mentor Sir James Crosby.

Its report found the pair, along with ex-chairman Lord Stevenson, must take “primary responsibility” for what went wrong.

Sir James had brought Mr Hornby to Halifax’s retail arm in 1999 from his previous position as a senior executive at Asda. Mr Hornby soared through the ranks to take overall charge of the bank at the age of just 39, with the financial bubble at its peak.

But the warning signs were already there for HBOS. Former director George Mitchell, who left in 2005, told the commission “there were clear signs the markets were overheating” and that “it was becoming increasingly difficult to source transactions with the right risk/reward characteristics”.

The commission stated: “In pursuit of expansion, HBOS sought out and found ‘sub-investment grade’ business” – loans which it should never have agreed to.

Even as financial disaster loomed during 2007 and 2008, the commission said, HBOS under Mr Hornby’s leadership continued to chase high-risk growth targets.

“One of the most striking features of the (bank’s) corporate division’s business was the expansion in its rate of growth in 2007 and 2008, compared with the immediately preceding years,” the report said.

“Part of the reason for this was rooted in the culture of HBOS.”

The commission made clear that this decision to keep offering riskier and riskier loans through 2007 and 2008 “exacerbated” the massive losses the bank ultimately suffered.

But those losses, it added, would anyway have been “disastrous”.

Speaking before the commission last year, Mr Hornby said he accepted major mistakes had been made, but repeatedly stressed the problems only really began for HBOS when the wholesale money markets effectively closed down during the credit crunch.

Without referring specifically to My Hornby, the commission’s report is scathing in its response.

“In view of the reckless lending policies pursued by HBOS corporate division, we are extremely disappointed by the attempts of the most senior leaders of HBOS at the time to attribute the scale of the consequent losses principally, or in significant measure, to the temporary closure of wholesale markets,” the commission said.

“The lending approach of the corporate division would have been bad lending in any market. The crisis in financial markets was merely the catalyst to expose it.”

Mr Hornby resigned his post in 2009 after the ailing HBOS was taken over by Lloyds TSB. Within months he had a new job as the highly-paid boss of Alliance Boots, before moving on to his current job as chief executive of Gala Coral in 2011.

Mr Hornby, who lives in Harrogate, was unavailable for comment last night.

But a statement from Coral said: “We never comment on other industries. However, we can say Coral is performing really well, and we are pleased with the job Andy is doing.”