The wild west of Australia’s pre-GFC banking expansion is on display today at Banking Day:
HBOS Australia and Bankwest incurred lending losses over the four years to 2011 equal to more than one fifth of their loans, a review by a UK parliamentary committee into HBOS, the bank’s then owner, found.
The UK committee released its review into the demise of HBOS on Friday. It is the most detailed account released by an oversight body of the events leading to the rescue of HBOS by Lloyds Bank, with UK government financial support, in late 2008.
Lloyds sold Bankwest to Commonwealth Bank at the end of 2008.
According to the review, impairments for HBOS in Australia over the period 2008 to 2011 totalled £3.6 billion, equivalent to 28 per cent of the value of its Australian loan book at the end of 2008, in sterling terms.
This was “an even higher loss as a proportion of loans than [that] incurred by the corporate division of HBOS in the UK,” the review said.
As the AFR quotes:
The committee stated in its report that senior former HBOS executives, including former group chief executive James Crosby and his 2006 successor Andy Hornby, have since admitted the offshore expansion was “appalling”, “catastrophic” and “horrible”
The next time someone tells you about what a great job regulators were doing pre-GFC point them to this story.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.