HBOS

About HBOS

HBOS, formed from the merger of Halifax and Bank of Scotland, was rescued through acquisition by Lloyds TSB. The merger was brokered by Prime Minister Gordon Brown in September 2008. Lloyds acquired HBOS at a significant discount. The combined bank, Lloyds Banking Group, received 17 billion in government capital. HBOS lost 10.8 billion in 2008 due to reckless commercial lending, particularly in commercial real estate. The acquisition nearly destroyed Lloyds. HBOS executives Peter Cummings and Mike Ellis were banned from banking. The Parliamentary Commission on Banking Standards criticized HBOS management for incompetence. Lloyds spent years recovering from the toxic assets it inherited. The case demonstrated the folly of growth through aggressive commercial lending without adequate risk management.