Former HBOS chief Hornby due £240,000 pension in 2017

The disgraced former chief executive of the failed bank HBOS is on the same “good leaver” pension deal as Sir James Crosby – meaning in four years time, when he is 50, he will be eligible to start drawing down his £240,000 inflation-linked pension.

Mr Hornby was one of three former HBOS chiefs – including Sir James Crosby and Lord Stevenson – to be fiercely criticised in a report from Britain’s influential Banking Commission last week which called for all three men to be barred from the City for their role in HBOS’s collapse.

Sir James Crosby responded by saying he should have his knighthood withdrawn and proposing to have his pension cut by 30 per cent. That put pressure on Lord Stevenson and Mr Hornby, but both have so far steadfastly declined to comment.

The case for Mr Hornby to answer is perhaps more pressing, given he is entitled to an HBOS pension and Lord Stevenson is not. Although the latter is facing pressure to relinquish his peerage given for services to business and the arts.

Pension intact

Mr Hornby took over as the bank’s chief executive in 2006 when Sir James stood down. So he wasn’t so much the architect of HBOS’s failed strategy, but the Commission said he failed to do anything to change the bank’s course, even though flags were raised about how much risky lending it was undertaking. He was there when HBOS was forced into an emergency rescue by Lloyds TSB and then promptly left soon after, with his pension pot intact.

Pressure is now growing for him to reduce that pot by at least the same amount as Sir James. Yet so far Mr Hornby, who was the boss of high street chemist Alliance Boots before joining Coral, has said nothing. He’s preferred, instead, to hide behind Coral’s statement that its business is doing extremely well and that it is very happy with Andy Hornby as its boss.

That’s as may be, but surely Mr Hornby also understands he, like Sir James before him, must be held to account for his role as CEO of the bank in the run up to its collapse? A collapse that cost the British taxpayer more than £20 billion.

Seemingly he does not. I tried to contact him numerous times today, but to no avail.

Services previously rendered

Lord Stevenson too is preferring to bury his head in the sand. As chairman throughout the whole of HBOS’s brief life (it was founded in 2001 by the merger of Halifax and Bank of Scotland) he oversaw the bank’s entire strategy from day one and was, the Commission said, particularly recalcitrant when it came to admitting any wrongdoing.

They branded him delusional and “living in cloud cuckoo land”, yet he too has so far refused to issue any public statement on the matter.

I spoke to a source very close to Lord Stevenson today and he came out fighting on the peer’s behalf. He said his knighthood was awarded in 1997 and his peerage in 1999, both for services before HBOS was even formed.

That’s true. Lord Stevenson did have a long and gilded career – on the board of the Tate, chair of the Arts and Media Honours Committee, Chairman of Pearson, and a director of finance advice group St James’s Place Capital, media giant BSkyB and the merchant bank Lazard – but unfortunately for him it’s his role as chairman of HBOS that will define his legacy.

Slow process

Meanwhile any chance the Banking Commission will get its wish that the former HBOS three be barred from the City for life looks a long, long way off. The banking regulator, the FCA, told me today its report into the failings of HBOS won’t be published until September at the earliest.

But even then, that report will not be able to ban Sir James, Mr Hornby or Lord Stevenson. For that to happen, the FCA will need fresh evidence and a fresh investigation. What’s the likelihood of that happening?

Coral should get a book running. Chances are the odds will be pretty long.