127-666: HBOS plc is a banking and insurance company in the United Kingdom, a wholly owned subsidiary of the Lloyds Banking Group , having been taken over in January 2009. It was the holding company for Bank of Scotland plc , which operated the Bank of Scotland and Halifax brands in the UK, as well as HBOS Australia and HBOS Insurance & Investment Group Limited, the group's insurance division. HBOS
254-468: A "rock of stability" resulted to an "unprecedented but essential" government action: the Treasury would infuse £37 billion ($ 64 billion, €47 billion) of new capital into Royal Bank of Scotland Group Plc, Lloyds TSB and HBOS Plc, to avert financial sector collapse or UK "banking meltdown". He stressed that it was not "standard public ownership", as the banks would return to private investors "at
381-505: A building society to a bank), Northern Rock distributed shares to members with savings accounts and mortgage loans ; the flotation share price was £4.51908. It joined the stock exchange as a minor bank. In 2000, it was promoted to the FTSE 100 Index . After the 2007 crisis, it was demoted to the FTSE 250 in December of that year, before suspension upon nationalisation . On 14 September 2007
508-480: A collapse of the financial sector. Barclays avoided taking a capital investment from the UK government by raising capital privately and HSBC moved capital to its UK business from its other businesses overseas. It was later confirmed that Lloyds TSB would have been required by the Financial Services Authority (FSA) to take additional capital from the government if it had not taken over HBOS. After
635-477: A forecast of what was likely to happen, but to simulate a near catastrophic economic scenario. These assumptions included: The conclusion from this exercise was that Lloyds would need additional capital if such a scenario ever occurred. Because the wholesale funding markets were effectively closed at the time, in March 2009 Lloyds made a deal with the UK government consisting of two elements: Lloyds impairments peaked in
762-675: A forensic accountant, provided information that was crucial to the police investigation into the Reading Fraud. Subsequently, Ms Masterton left the bank and brought a case for unfair constructive dismissal, which was settled in 2015. In December 2018 Kevin Hollinrake MP , Co-chairman of the APPG on Fair Business Banking tabled a debate in Parliament on HBOS Reading and the Economic Secretary to
889-503: A further £73 million deferred consideration was paid by Virgin. In 2014 Virgin Money repaid a further £154.5 million that it had received as part of the refinancing package. The Northern Rock Shareholder Action Group (NRSAG) has been active since the Northern Rock crisis began in 2007, seeking fair compensation for the thousands of small shareholders who owned Northern Rock shares. The group
1016-499: A green support services company, Eaga (now Carillion Energy ), as it was surplus to the bank's requirements at the time. The Kielder and Prudhoe buildings of the Gosforth site were completed in the early 1990s, behind which lies the distinctive glass-fronted Alnwick building. The main Atrium reception is adjacent to this, opening out onto Baker Street , a large covered atrium that housed
1143-531: A merger of Halifax and Bank of Scotland in 2001, Halifax having demutualised and floated four years prior. In 2006, HBOS secured the passing of the HBOS Group Reorganisation Act 2006 , a private Act of Parliament that rationalised the bank's corporate structure. The act allowed HBOS to make the Governor and Company of the Bank of Scotland a public limited company, Bank of Scotland plc, which became
1270-481: A portion of its business. The group's divestment plan—codenamed "Verde"—identified 632 branches which would be transferred to a new business. Customers with accounts held by the branches, and staff employed within them, would be transferred. The new business would be formed from some Lloyds TSB branches in England and Wales, all branches of Lloyds TSB Scotland plc and Cheltenham & Gloucester plc; these would operate under
1397-489: A process known as securitisation . In 2007, there was much press attention given to the growing crisis due to subprime mortgage lending, particularly in the United States. Amid the resultant unease by August 2007, global demand from investors for securitised mortgages had fallen away, and Northern Rock was unable to raise funding by selling its securitised loan books, and therefore became unable to repay short-term loans from
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#17328694443661524-550: A report on the fraud at the request of the bank, called Project Lord Turnbull. She subsequently left the bank and claimed for constructive dismissal. In January 2019, the Group was criticized by the Chair of the Business, Energy and Industrial Strategy Committee for changes to its overdraft fees policy. Rachel Reeves MP said of the changes that "While [they] might be legal, they are not within
1651-463: A residual household income as defined by their student funding body of more than £25,000 per annum, since the programme is a social mobility initiative. In July 2007, Euromoney announced Lloyds TSB as the winners of its Awards for Excellence. In June 2008, Lloyds TSB Group came top in the Race for Opportunity's (RfO) annual survey. In May 2009, Lloyds TSB Corporate Markets was recognised as 'Bank of
1778-672: A restaurant, shop and on-site branch. A number of other buildings, all named after North-Eastern castles are joined to Baker Street . A sub-division in Guernsey was established in February 1996, handling offshore savings and investment accounts. The Guernsey business was shut down on 2 September 2010. Northern Rock opened a branch in Ireland on 16 November 1999 and the first branch in Northern Ireland followed on 4 April 2007. The first branch of
1905-508: A sizable surplus in the years after nationalisation, even though any and all Government assistance was completely reimbursed in those years, including interest paid at penal rates at no expense to the UK public. The NRSAG asked the Government to review their original compensation decision, given that the updated and widely confirmed numbers prove a huge surplus. To request an appeal, the NRSAG wrote to
2032-667: A stock market flotation of the TSB business as an alternative, should the transfer not be completed. On 24 April 2013, The Co-operative Bank decided not to proceed with the acquisition because of the economic downturn and the tough regulatory environment imposed on banks. Lloyds Banking Group said that the rebranding to TSB Bank would still take place and that the new bank will be divested through an initial public offering in 2014. TSB Bank began operations on 9 September 2013, under CEO Paul Pester . Lloyds Banking Group announced that 25% of TSB's shares would be floated on 24 June 2014; however, with
2159-563: Is a British financial institution formed through the acquisition of HBOS by Lloyds TSB in 2009. It is one of the UK's largest financial services organisations, with 30 million customers and 65,000 employees. Lloyds Bank was founded in 1765 but the wider Group's heritage extends over 320 years, dating back to the founding of the Bank of Scotland by the Parliament of Scotland in 1695. The Group's headquarters are located at 25 Gresham Street in
2286-550: Is an active supporter of disability rights and best practice; it is a Gold member of the Employers' Forum on Disability. In 2010, the group helped create and currently sponsors the Royal Association for Disability Rights (RADAR) Radiate network, which aims to support and develop a talent pool of people with disabilities and health conditions, and to potentially act as a source of thinking for organisations on how 'disabled talent'
2413-825: Is best spotted and developed. In 2011, Lloyds Banking Group established the Lloyds Scholars Programme, a social mobility programme aimed at UK students, in partnership with nine leading UK universities. The Scholars Programme takes 15 students per university per year and consists of a £1000 per annum scholarship paid directly to the student to help with living costs, a Lloyds Banking Group mentor and two ten-week internships, paid at £18,000 pro rata. The programme supports students throughout their university career and requires Scholars to complete 100 hours of volunteering in their local community, per year of their degree. There are also restrictions on who can apply, which exclude medical and veterinary students, as well as anyone with
2540-465: Is not the role of a Prime Minister to tell a City institution what to do". The Lloyds TSB board stated that merchant banks Merrill Lynch and Morgan Stanley were among the advisers recommending the takeover. Lloyds Banking Group said Edinburgh-based HBOS, which it had absorbed in January, made a pre-tax loss of £10.8 billion in 2008. Andy Hornby, the former chief executive of HBOS, and Lord Stevenson of Coddenham, its former chairman, appeared before
2667-429: Is run by a committee of volunteers. The UK Shareholders Association provide administrative and advisory oversight to the group. The Committee reached the conclusion that HM Treasury has made a substantial amount of money from running down the loan book of the bank. The NRSAG committee made several failed appeals to the Government previously, but the facts were not fully known then, but it is evident now that all loans to
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#17328694443662794-556: The Alavi Foundation , Bank Melli , the Government of Iran , and others circumvent US laws banning financial transactions with certain states. They did this by stripping information out of wire transfers, thereby concealing the source of funds. Lloyds Banking Group settled with the US government for US$ 350 million . The US government's Manhattan District Attorney's Office was involved, although
2921-788: The City of London , while its registered office is on The Mound in Edinburgh . It also operates office sites in Birmingham , Bristol , West Yorkshire and Glasgow . The Group also has overseas operations in the US and Europe. Its headquarters for business in the European Union is in Berlin , Germany . The business operates under a number of distinct brands, including Lloyds Bank , Halifax , Bank of Scotland and Scottish Widows . Former Chief Executive António Horta-Osório told The Banker , "We will keep
3048-472: The London Stock Exchange , carrying other bank shares with it. In September 2012, Peter Cummings, the head of HBOS corporate banking from 2006 to 2008, was fined £500,000 by the UK financial regulator over his role in the bank's collapse. The Financial Services Authority (FSA) also banned Cummings from working in the banking industry. The losses in his division exceeded the initial taxpayer bailout for
3175-408: The ticker symbol NRK. During the early 2000s the company borrowed substantially to fund mortgages, with the aim of ambitious growth, and also donated large amounts to charitable purposes and communities directly and through sponsorships. The global banking crisis beginning around 2007–08 meant that it was unable to produce income as expected from its loans, and was at risk of being unable to repay
3302-469: The 1990s. Notably, Dave Jones, the Group Finance Director through the crisis, had only been in his role since the retirement of Bob Bennett in January 2007. Alongside Applegarth, Bennett had been one of the architects of the bank's flotation in 1997 and its subsequent substantial growth. He had been wary of its continued aggressive growth strategy, which would continue up until summer 2007, despite
3429-497: The 2000s, which saw the development some new buildings as well as the demolition of their original 1960s tower block during Spring 2006. A new tower block, simply known as The Tower , was completed in November 2008, originally intended to create 1500 jobs, and act as the main entrance and focal point of the company headquarters. The local council, Newcastle City Council , purchased the building for £22 million, and leased it to
3556-560: The BBC reported that HBOS was in takeover talks with Lloyds TSB, in response to a precipitous drop in HBOS's share price. The talks concluded successfully that evening with a proposal to create a banking giant which would hold a third of UK mortgages. An announcement was made on 18 September 2008. On 19 November 2008, the new acquisition and government preference share purchase was agreed by Lloyds TSB shareholders. HBOS shareholders overwhelming approved
3683-464: The Bank of England, to replace funds it was unable to raise from the money market. Reporting of this complex scenario led to panic among individual depositors, who feared that their savings might not be available should Northern Rock go into receivership. The result was a bank run – the UK's first in 150 years – where depositors lined up outside the bank to withdraw all of their savings as quickly as possible, particularly since many other people were doing
3810-553: The Bank of Scotland, which had by then become a registered public limited company, Bank of Scotland plc . Although officially HBOS was not an acronym of any specific words, it is widely presumed to stand for Halifax Bank of Scotland. The corporate headquarters of the group were located on The Mound in Edinburgh, Scotland, the former head office of the Bank of Scotland. Its operational headquarters were in Halifax , West Yorkshire, England ,
3937-457: The Bank's refusal to support victims or to compensate them for the additional three-year delay caused by the failed Griggs Review. Three of the six criminals convicted for the HBOS Reading crimes have now been released from jail with a fourth due to be released by the end of 2021. HBOS conducted all its operations through three main businesses: Bank of Scotland plc was the banking division of
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4064-525: The British courts, but hoped to take the case to the European courts. However, on 8 December 2009, it was announced that the valuer Andrew Caldwell had decided that the Northern Rock shareholders should get no compensation. On 23 February 2009, Northern Rock announced that they would be offering £14 billion worth of new mortgages, over the next two years, as a part of their new business plan. This new lending
4191-512: The Commons Treasury Committee to answer questions about the near-collapse of the bank. Hornby said: "I'm very sorry what happened at HBOS. It has affected shareholders, many of whom are colleagues, it's affected the communities in which we live and serve, it's clearly affected taxpayers, and we are extremely sorry for the turn of events that has brought it about." On 13 October 2008, Gordon Brown 's announcement that government must be
4318-475: The December 2009 capital raise involved issuing new shares to debt holders in February 2010. This diluted existing shareholders—including the UK Government, whose shareholding was reduced from 43.4% to around 41%. The group sold its 70% stake in insurance company Esure to Esure Group Holdings on 11 February 2010. The share was valued at around £185 million. On 4 November 2012, it was reported that Lloyds
4445-484: The FSA was intentionally misled. Moreover, the report is highly critical of the auditors, KPMG. In section eight the report states, “KPMG have not only just been negligent but their direct involvement in a number of material malpractices and violations regarding HBOS is fundamental and exposes them to claims in relation to misconduct, serious dereliction of duty and breach of regulatory and statutory duties.” In 2013 Sally Masterton,
4572-667: The Foskett Panel was formed under retired High Court Judge, Sir David Foskett , to finally compensate the victims of HBOS Reading. The process continues and the Panel have confirmed it could take up to a further two years (2023) to compensate all the victims. In December 2020, the APPG on Fair Business Banking submitted a formal complaint under the SM&;CR to the FCA about the conduct of LBG in relation to their treatment of HBOS Reading victims including
4699-509: The Government effectively took ownership of the insolvent institution away from its shareholders, without reimbursement. The media reported cases where some shareholders had their life savings in the shares, which were taken from them. The shares had already lost over 90% of their value prior to nationalisation, and were valued at nil in an independent valuation process, as the government had not guaranteed aid. This would later form part of shareholder's action to seek compensation as, at that point,
4826-602: The Griggs review was not fit for purpose and issued a complaint under the SM&CR to the FCA about the management of LBG in relation to the Griggs Review. SME Alliance also commissioned Jonathan Laidlaw QC to give an ‘Advice’ on the Griggs Review. Laidlaw QC concluded the Griggs Review was “procedurally defective” and it referenced “LBG’s failure to adjust the scope of the Review following
4953-472: The HBOS group, and operated the following brands: HBOS Australia was formed in 2004 to consolidate the group's holdings in Australia. It consisted of the following subsidiaries: On 8 October 2008, HBOS Australia sold its Bank of Western Australia and St Andrew's Australia Pty Ltd subsidiaries for approximately A$ 2bn to Commonwealth Bank of Australia . Lloyds Banking Group Lloyds Banking Group plc
5080-551: The Lloyds 2018 AGM where he berated the board of directors from the floor. In July 2022, insider.co.uk reported that Thames Valley Police has referred Noel Edmonds' case against Lloyds Banking Group to the CPS, following a criminal investigation into a former HBOS banker that led to the liquidation of the TV presenter's Unique Group of businesses. Dame Linda Dobbs is chairing an independent inquiry into
5207-559: The Mortgage Business and Birmingham Midshires. All three were part of the Halifax Bank of Scotland Group, Britain's biggest mortgage lender. James Crosby, head of HBOS at the time, refused to be interviewed in relation to the exposed mortgage fraud. Further examples of mortgage fraud have come to light, which has seen mortgage brokers take advantage of fast track processing systems, as seen at HBOS, by entering false details, often without
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5334-584: The NR 'blocks' inline with the main company, using the same new typeface. The Red Box Design Group designed all the currently standing buildings at the company's headquarters in Gosforth and have contributed to many of the other design aspects of the company, such as the in-branch styling. From 1 October 1997 until the government nationalisation, the bank used the symbol NRK on the London Stock Exchange. One of Northern Rock's final advertising campaigns before
5461-509: The National Audit Office calculated the government's average buying price for its entire stake in Lloyds to be about 74 pence. It was announced in the government's pre-budget report on 9 December 2009 that the forecast for the total loss to taxpayers for all the bank bailouts had been reduced from £50 billion to £10 billion—in part because of the restructuring of the government's asset protection scheme. The final part of
5588-629: The Northern Counties Permanent Building Society (established in 1850) and the Rock Building Society (established in 1865). During the following 30 years, Northern Rock expanded through the acquisition of 53 smaller building societies, most notably the North of England Building Society in 1994. Along with many other UK building societies in the 1990s, Northern Rock chose to demutualise as a building society and float on
5715-575: The TSB brand as TSB Bank plc . The remainder of the Lloyds TSB business would be rebranded as Lloyds Bank. Lloyds Banking Group reached a Heads of Terms agreement in July 2012 to sell the Verde branches to The Co-operative Bank for £750 million. The final transfer of TSB Bank plc to the new owner was due to be completed by late 2013. In February 2013, it was reported that Lloyds Banking Group were considering
5842-648: The Treasury Select Committee. Also, the group wrote to each MP to back their campaign for fairness and justice. Northern Rock has been one of the top five mortgage lenders in the United Kingdom in terms of gross lending according to Council of Mortgage Lenders statistics. As well as mortgages, the bank also deals with savings accounts and insurance. Home and contents insurance was dealt with by AXA whilst Legal & General , whose mortgage book Northern Rock acquired, arranged life insurance investments. The bank offered credit cards until 2003, when it sold
5969-453: The Treasury, John Glen MP , confirmed LBG would now fund an ‘Assurance’ review about the Griggs review, requested by the FCA. This led to a report by Sir Ross Cranston , a retired High Court Judge, in December 2019. Sir Ross accused LBG of “an unacceptable denial of responsibility” over its treatment of the HBOS Reading victims. This resulted in questions from the FCA including: “We will also require LBG senior management to explain how and why
6096-410: The UK arms sector totalling £483.4 million, and served as principal banker for Babcock International and Chemring . During 2003, The Money Programme uncovered systemic mortgage fraud throughout HBOS. The Money Programme found that during the investigation, brokers advised the undercover researchers to lie on applications for self-certified mortgages from, among others, the Bank of Scotland,
6223-792: The Year' for the fifth year running at Real FD/ CBI FDs' Excellence Awards. In October 2009's "What Investment" magazine awards, Halifax won Best Savings Account Provider and Halifax Share Dealing was also named Best Share Dealing Service. In October 2009's "Consumer Money Awards", Halifax won Best First Time Mortgage Provider. Lloyds' brands were commended in several other categories, including Cheltenham & Gloucester for Best Remortgage Provider and Best High Street Mortgage Provider; Lloyds TSB for Best Current Account Provider, Best Student Account Provider and Best Customer Service Provider; and Halifax for Best ISA Provider and Best High Street Savings Provider. In November 2009's "Your Mortgage Awards", Halifax won
6350-532: The acquisition. Daniels said that a company would always like to do more due diligence on another company, but there are legal limits on how much is possible before an actual acquisition. Losses were slightly more than the £10 billion originally identified by the due diligence owing to write-offs of property loans because of falling property prices and the lack of demand for it. The then-Chairman of Lloyds, Sir Victor Blank , said in August 2009 that losses had been "at
6477-405: The aid was certain and the company had never stopped operating as a going concern. A substantial reduction in the staff was announced in 2008, with 800 people made compulsorily redundant in July of that year, and another 500 taking voluntary redundancy. The bank planned to make another 700 redundant by 2011. On 1 January 2010 the bank was split into two parts, assets and banking. In June 2011
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#17328694443666604-410: The amounts it had borrowed. The news that the bank had approached the government for support with its liquidity led within 24 hours to a public lack of confidence and concerns that savings were at risk, and the bank failed following a bank run as people rushed to withdraw their savings. It was the first British bank in 150 years to fail due to a bank run. Unable to find a commercial buyer or secure
6731-433: The applicant's knowledge. In 2002, HBOS dropped the Bank of Wales brand and absorbed the operations into Bank of Scotland Business Banking. On 13 February 2009, Lloyds Banking Group revealed losses of £10 billion at HBOS, £1.6 billion higher than Lloyds had anticipated in November because of deterioration in the housing market and weakening company profits. The share price of Lloyds Banking Group plunged 32% on
6858-425: The award for Best Overall Mortgage Lender for the eighth year running, as well as the award for Best Large Loans Mortgage Lender. Birmingham Midshires was named Best Specialist and Buy-to-Let Mortgage Lender, and Lloyds TSB won the award for Best Overseas Mortgage Lender. A 2010 report by The Wall Street Journal described how Credit Suisse , Barclays, Lloyds Banking Group, and other banks were involved in helping
6985-417: The bank had sufficient assets, it had become vulnerable. The branch operations were eventually returned to private ownership when the branches and other retail operations were acquired by Virgin Group in 2012, being rebranded as Virgin Money the same year. The mortgage book of higher risk assets was renamed Northern Rock (Asset Management) and later " NRAM plc ", and remained in public ownership until it
7112-632: The bank in October 2008. On 3 October 2010, Lynden Scourfield, former director of mid-market high-risk at Bank of Scotland Corporate, his wife Jacquie Scourfield, ex-director of Remnant Media Tony Cartwright, and ex-NatWest banker David Mills, were arrested on suspicion of fraud by the Serious Organised Crime Agency . The scandal centred around Scourfield's use of his position to refer companies to Quayside Corporate Services, owned and operated by David Mills, for "turnaround" services which Quayside
7239-484: The bank included Virgin Money , National Australia Bank , NBNK , Santander , Blackstone , Tesco , TowerBrook , Yorkshire Building Society and Coventry Building Society . Former Chancellor of the Exchequer Alistair Darling had stated that he was in no "hurry" to return the bank to the private sector. The bank was split into two parts, assets and banking on 1 January 2010. On 15 June 2011, it
7366-541: The bank opened in Denmark on 7 February 2007; however as part of the Government restructuring, the Danish operations ceased on 18 June 2008. The €650 million worth of Irish deposits were sold to Permanent TSB in 2011. In 2000 Northern Rock introduced a new corporate identity consisting of a magenta square containing the company name. This replaced the NR 'blocks' logo. The Northern Rock Foundation also changed its logo in 2003 from
7493-408: The bank sought and received a liquidity support facility from the Bank of England , following problems in the credit markets caused by the 2007–2008 financial crisis . The bank was more exposed than others to restrictions in the supply of credit because of the way it had funded its expansion. It had borrowed short term on the wholesale money markets and lent long term for mortgages on property. This
7620-492: The bank was officially put up for sale back to the private sector, and on 17 November 2011 it was announced that Virgin Money was going to buy Northern Rock plc for £747 million up front and other potential payments of up to £280 million over the next few years. The sale went through on 1 January 2012. The government said it had no plans to sell Northern Rock (Asset Management) and there would be no further job losses, except for those already announced. Virgin also pledged to keep
7747-417: The bank was repaying the loan well ahead of target, owing a net balance of only £8.9 billion of the loan which stood at £26.9 billion at the end of 2007. By October, customers appeared to be regaining confidence in the bank, when it emerged that there had been a surge in the number of new accounts which had been opened. People perceived Northern Rock as a safe place to put their money, given that it
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#17328694443667874-521: The bank was taken into state ownership as a result of two unsuccessful bids to take over the bank, neither being able to fully commit to repayment of taxpayers' money within three years. The bank was managed at " arm's length " by the government through UK Financial Investments . The bank planned to repay the government debt within three to four years, primarily by encouraging mortgage customers to take their mortgage to another lender. Costs were also reduced by reducing numbers of staff. As of 3 March 2009,
8001-432: The bank £245 million; Scourfield pleaded guilty to six counts including corruption, and Dobson was found guilty of counts including bribery, fraud and money laundering. The court also convicted David Mills, Michael Bancroft, Alison Mills, and John Cartwright for their parts in the conspiracy. On 2 February 2017, David Mills was jailed for 15 years, Scourfield for 11 years and three months, and Bancroft for 10 years. Dobson
8128-407: The bonuses would enable them to retain critical staff members at risk of being poached by other companies. It had previously been criticised in 1998 when the pay of the executive team that led the flotation was 40% higher in the year following. In late 2007, Virgin Money was named as the preferred bidder for the group, with Olivant Group later beginning talks around takeover. On 22 February 2008,
8255-419: The business to The Co-operative Bank in order to free capital for its rapid growth in mortgage lending, making a profit of more than £7 million. Northern Rock continued to sell credit cards under its own brand through The Co-operative Bank until November 2007; the decision to stop was made before the 2007 crisis. In 2006 the bank had moved into sub-prime lending via a deal with Lehman Brothers . Although
8382-414: The business to Nationwide in 4 years. After 27 years the business is once again a mutual. Under non-executive chairman Matt Ridley and Chief Executive Adam Applegarth , Northern Rock had a business plan which involved borrowing heavily in the UK and international money markets, extending mortgages to customers based on this funding, and then re-selling these mortgages on international capital markets, in
8509-489: The case was merged with one at the federal US Department of Justice. In 2009, a case was brought against Lloyds by HM Revenue and Customs on grounds of tax avoidance . Lloyds was accused of disguising loans to American companies as investments in order to reduce the tax liability on them. Lloyds TSB received 9,952 complaints via the Financial Ombudsman Service in the last half of 2009. This, when added to
8636-518: The case was reported on BBC Radio Four 's File on Four programme on 31 January 2017. Lloyds is taking a £100 million hit paying compensation to the victims. Noel Edmonds , a celebrity victim of the scam, reached a settlement with the bank in July 2019. Edmonds had argued that staff at the Reading branch had ruined his business, the Unique Group. Edmonds' campaign against Lloyds included attending
8763-431: The chief executive, were made internally. At the time of the 2007 financial crisis Matt Ridley was the chairman and Adam Applegarth was the chief executive. Ridley resigned in October 2007 and Applegarth resigned in November 2007, although the latter stayed on in a caretaker role until December 2007. The chief financial officer was Andy Kuipers, who joined the company in 1987. After Applegarth's departure, Kuipers became
8890-1026: The consolidation, making a takeover bid for Abbey National in 2001, which was later rejected by the Competition Commission . In October 2003, Lloyds TSB Group agreed on the sale of its subsidiary NBNZ Holdings Limited —comprising the Group's New Zealand banking and insurance operations—to Australia and New Zealand Banking Group . In July 2004, Lloyds TSB Group announced the sale of its business in Argentina to Banco Patagonia Sudameris S.A. and its business in Colombia to Primer Banco del Istmo, S.A. On 20 December 2005, Lloyds TSB announced that it had reached an agreement to sell its credit card business Goldfish to Morgan Stanley Bank International Limited for £175 million. In 2007, Lloyds TSB announced that it had sold its Abbey Life assurance division to Deutsche Bank for £977 million. On 17 September 2008,
9017-586: The deal on 12 December. Lloyds TSB Group changed its name to Lloyds Banking Group upon completion of the takeover on 19 January 2009. On 12 February 2009, Eric Daniels , the CEO of the Group, was questioned about the banking crisis during a session of the Treasury Select Committee of the House of Commons . One of the key issues concerned Lloyds' takeover of HBOS and the amount of due diligence carried out before
9144-524: The demise of Lehman Brothers , HBOS's share price suffered wild fluctuations between 88p and 220p per share, despite the FSA's assurances as to its liquidity and exposure to the wider credit crunch . However, later that day, the BBC reported that HBOS was in advanced takeover talks with Lloyds TSB to create a "superbank" with 38 million customers. That was later confirmed by HBOS. The BBC suggested that shareholders would be offered up to £3.00 per share, causing
9271-464: The different brands because the customers are very different in terms of attitude". Lloyds Banking Group is listed on the London Stock Exchange (LSE) and is a constituent of the FTSE 100 Index . It had a market capitalisation of approximately £ 30.65 billion as of 1 August 2022—the 19th-largest of any LSE listed company —and has a secondary listing on the New York Stock Exchange in
9398-438: The failings identified by Sir Ross occurred in the first place.” Between December 2019 and February / March 2020, Antonio Horta-Osorio , the CEO of LBG, met with many of the Reading victims promising he would now oversee the compensation process personally. Many victims have complained there has been no contact with Mr. Horta-Osorio, who is now allegedly leaving the Bank for a post at Credit Suisse, since May 2020. In April 2020
9525-631: The financial services industry. Causes of failure were identified as follows: After putting the investigation on hold in 2013, in April 2017, the Financial Conduct Authority resumed its probe of "the way HBOS handled fraud allegations at its Reading branch". On 21 June 2019, the Financial Conduct Authority fined the Bank of Scotland £45.5 million over its failure to report suspicions of fraud at its Reading branch which led to
9652-456: The firm of consultants run by Mills and his wife Alison. Quayside purported to be turnaround consultants, offering business experience and expertise to help small business customers improve their fortunes, but far from helping turn businesses around, Mills and his associates were milking them for huge fees and using their relationship with the bank to bully business owners and strip them of their assets. In cash fees alone, according to prosecutors in
9779-472: The first half of 2009; by mid-2009 the asset protection scheme increasingly looked like a poor deal for Lloyds. Following negotiations, the government confirmed on 3 November 2009 that Lloyds would not enter the scheme—although RBS still would. Instead, Lloyds launched a rights issue to raise capital from existing shareholders; as an existing 43.4% shareholder the government chose to take part in this and thus maintained its shareholding at 43.4%. Following this,
9906-451: The form of American depositary receipts . Lloyds Bank is one of the oldest banks in the UK, tracing its establishment to Taylors and Lloyds founded in 1765 in Birmingham by button maker John Taylor and iron producer and dealer Sampson Lloyd II. Through a series of mergers, Lloyds became one of the Big Four banks in the UK. Bank of Scotland , which originated in the 17th century, is
10033-403: The former head office of Halifax. On 19 January 2009, the group was acquired by Lloyds TSB and became a subsidiary of Lloyds Banking Group after both sets of shareholders approved the deal. Lloyds Banking Group stated that the new group would continue to use The Mound as the headquarters for its Scottish operations and would continue the issue of Scottish bank notes . HBOS was formed by
10160-452: The full scale of the fraud - or offered to compensate its victims"; the broadcaster noted that the fraud was first discovered in 2007 by the bank's customers Nikki and Paul Turner, who used publicly available records to uncover it, but that after the Turners submitted their evidence to the bank it dismissed their claims and tried to repossess their home. Following the convictions, the background to
10287-418: The further government support needed, it was taken into public ownership in 2008, as an alternative to insolvency . By that point the government had extended liquidity support of tens of billions of pounds to Northern Rock. An inquiry concluded that the board had failed to properly protect the bank from the risks inherent in its strategy, or to restrain the executive directors where required, therefore although
10414-556: The government's aid; its chief executive Fred Goodwin resigned. The government acquired $ 8.6 billion of preference shares and underwrote $ 25.7 billion of ordinary shares. Thus, it intended to raise £15 billion (€18.9 billion, $ 25.8 billion) from investors, to be underwritten by the government. The State would pay £5 billion for RBS, while Barclays Bank raised £6.5 billion from private sector investors, with no government help. Reuters reported that Britain could inject £40 billion ($ 69 billion) into
10541-400: The group the second-largest UK provider of life assurance and pensions after Prudential . In September the same year, Lloyds TSB purchased Chartered Trust from Standard Chartered Bank for £627 million to form Lloyds TSB Asset Finance Division, which provides motor, retail and personal finance in the United Kingdom under the trading name Black Horse. Lloyds TSB continued to take part in
10668-600: The headquarters of the bank in Newcastle upon Tyne. The combined business now operates under the Virgin Money brand. On 12 October 2012 Northern Rock plc was renamed Virgin Money plc, and Virgin Money Limited was renamed Northern Rock Limited. By this time the Northern Rock website had effectively become a ' soft redirect ' to Virgin Money's website. In 2024, Nationwide Building Society bought Virgin Money, and aims to rebrand
10795-602: The increasing volatility in the markets on which Northern Rock relied. Commentators later suggested that with Bennett's retirement, the executive board was dominated by Applegarth. A report by the Financial Services Authority conceded in February 2008 that it had been wrong to consider Northern Rock low risk, and as a result had given the company too little scrutiny. The group was criticised when it emerged that they had begun to pay in excess of 150 senior staff members substantial retention bonuses. Northern Rock hoped
10922-643: The investigation and reporting of the fraud. This inquiry started in April 2017. The HBOS Reading trial finished on 2 February 2017. In April 2017 Lloyds Banking Group (LBG) commissioned Professor Russell Griggs to oversee a compensation scheme for the victims of HBOS Reading. The scheme concluded all of the victims businesses would have failed despite the Reading fraud and therefore only awarded compensation for D&I (Distress and inconvenience) and nothing for D&C (Direct and consequential loss). In October 2018 SME Alliance (a not for profit organisation that supports and lobbies for victims of Bank misconduct) concluded
11049-409: The investigation took six years at a cost of £7m. Secondly, that a fraud of that size could not have taken place without either complicity or incompetence, or a lack of oversight. Lastly, that if Thames Valley Police had not taken on the case no one else would have, and the crime would not have been investigated. The BBC added: "A decade on, HBOS's owner Lloyds Banking Group still has not acknowledged
11176-506: The jailing of six people. The authority said that the bank "risked substantial prejudice to the interests of justice" by withholding information. The fine was reduced by almost £20 million because the bank agreed to settle. In December 2008, the British anti-poverty charity, War on Want , released a report documenting the extent to which HBOS and other UK commercial banks invested in, provided banking services for, and made loans to arms companies . The charity wrote that HBOS held shares in
11303-457: The losses at HBOS were greater than had been anticipated, at around £10 billion. The share price of Lloyds Banking Group fell 32% on the London Stock Exchange , carrying other bank shares with it. On 13 October 2008, Prime Minister Gordon Brown announced a government plan for the Treasury to invest £37 billion ( US$ 64 billion , €47 billion ) of new capital into major UK banks—including Royal Bank of Scotland Group , Lloyds TSB and HBOS—to avert
11430-405: The money market. This problem had been anticipated by the financial markets, which drew greater attention to it. The major UK banks also faced the same problems raising funding, but as less of their business model was reliant upon securitisation, the effective freezing of the market in August 2007 was less critical. On 14 September 2007, the bank sought and received a liquidity support facility from
11557-411: The mortgages were sold under Northern Rock's brand through intermediaries, the risk was being underwritten by Lehman Brothers. Mortgages with LTV ("Loan to Value") ratios of up to 130% were made. At the time of being bought by Virgin the bank had 75 branches that have since been re-branded under the Virgin Money name. In 2012 Northern Rock began to provide Virgin-branded savings accounts. The bank
11684-638: The new policy stated that the account amounted to religious discrimination , as users of the Sharia-compliant account would not incur interest if they went overdrawn , in contrast with users of typical current accounts. The bank responded that the account was available to both Muslims and non-Muslims, and that comparisons of interest rates between its Islamic Account and traditional current accounts were "meaningless". Lloyds Banking Group has been criticised for failing to compensate, or even apologise to, victims of fraud perpetrated by employees of HBOS . LBG
11811-529: The next five years. In September 2013, it was reported that the UK government was planning to sell up to a quarter of its shares in Lloyds Banking Group. The government sold 6% of its shares on 17 September 2013 at 75p, raising £3.2 billion and reducing its stake to 32.7%. The UK government then sold a further 7.8% on 26 March 2014 at 75.5p raising a further £4.2bn and reducing its stake to 24.9%. A trading plan of incremental sales during 2015 reduced
11938-417: The offer being 10 times oversubscribed, 35% of TSB's shares were sold at 260p on 20 June. Banco Sabadell agreed to purchase TSB in March 2015, and completed the acquisition on 8 July 2015. The purchase meant Lloyds sold its final holding in TSB. The business is divided into five divisions: Refers to Chairmen and Chief Executives since 2009, when Lloyds Banking Group was formed. Lloyds Banking Group
12065-454: The other brands of the Lloyds Banking Group, was twice the number of complaints received by Barclays—the next-most-complained-about UK bank. The Financial Ombudsman Service upheld fewer complaints against Lloyds TSB than it did against Barclays. In 2014, Lloyds launched the 'Islamic Account', a current account aimed at Muslims and which it stated was compliant with Sharia law – namely, the prohibition of credit or debit interest. Critics of
12192-534: The principal banking subsidiary of HBOS. Halifax plc and Capital Bank plc transferred its undertakings to Bank of Scotland plc.The Halifax brand name was retained, Halifax then began to operate under the latter's UK banking licence . The provisions in the Act were implemented on 17 September 2007. The share price peaked at over 1150p in February 2007. In 2004, Paul Moore , HBOS head of Group Regulatory Risk , warned senior directors at HBOS about excessive risk-taking. He
12319-476: The public release of the Project Lord Turnbull Report is another important defect.” The Project Lord Turnbull Report was written by accountant Sally Masterton. She had worked for the bank from 1998, first under HBOS and then Lloyds. The report makes several serious allegations about HBOS and Lloyds management, the most important of which are that the Reading Fraud was deliberately concealed, and that
12446-474: The publicly owned stake to below 10% by the end of October. Sales resumed in November 2016, as the holding was reduced to 7.99%. On 17 March 2017, the British government confirmed its remaining shares in Lloyds Banking Group had been sold. The UK government's purchase of a 43.4% stake in the group in 2009 was considered as state aid; under European Commission competition laws, the group would be required to sell
12573-410: The purchase by Virgin was titled 'Works for Me' and featured local customers. Following the purchase by Virgin, the Northern Rock brand was gradually phased out during 2012. Upon buying Northern Rock, Virgin Money changed their logo to use both Virgin's red and Northern Rock's magenta colours. Prior to the credit crisis the company had focused on developing its own staff, and most appointments, including
12700-399: The recapitalisations and Lloyds' acquisition of HBOS, the UK Government held a 43.4% stake in Lloyds Banking Group. In February 2009, after it became apparent that the recession would be deeper than originally anticipated, the FSA was instructed to "stress test" the banks against a severe economic downturn. The FSA stated that the assumptions underlying the stress test were not intended to be
12827-503: The right time". The Chancellor of the Exchequer , Alistair Darling , claimed that the British public would benefit from the rescue plan, because the government would have some control over RBS in exchange for about £20 billion of funding. Total State ownership in RBS would be 60%, and 40% for HBOS. Royal Bank of Scotland said it intended to raise £20 billion ($ 34 billion) capital with
12954-416: The same. As the UK government provided the liquidity support facility, they also exerted pressure on the bank to create a longer-term recovery plan. Over the next few months, there were numerous changes to the board of directors and executive team. On 19 October, chairman Matt Ridley resigned and was replaced by Bryan Sanderson, a former Managing Director of BP. Chief Executive Adam Applegarth's resignation
13081-465: The second-oldest surviving UK bank after the Bank of England . In 2001, a wave of consolidations in the UK banking market led the former Halifax Building Society —which originated in 1853—to agree to a £10.8 billion merger with Bank of Scotland. Trustee Savings Bank (TSB) can trace its roots back to the first savings bank founded by Henry Duncan in Ruthwell , Dumfriesshire , in 1810. TSB itself
13208-408: The share price to rise, but later retracted that comment. Later that day, the price was set at 0.83 Lloyds shares for each HBOS share, equivalent to 232 p per share, which was less than the 275p price at which HBOS had raised funds earlier in 2008. The price was later altered to 0.605 Lloyds shares per HBOS share. To avoid another Northern Rock-style collapse , the UK government announced that should
13335-547: The spirit of the FCA's recommendations" to scrap overdraft fees and replace them with a single interest rate and that they would "increase the charges for the vast majority of customers". A review conducted by Thames Valley Police indicated that fraud may have been committed at the Lloyds Business Support Unit based in Bristol. Lloyds Banking Group have denied this. There are more than two hundred alleged victims of
13462-585: The stock exchange as a bank. Throughout this period an argument against demutualisation was that the assets of a mutual society were built up by its members throughout its history, not just by current members, and that demutualisation was a betrayal of the community that the societies were created to serve. Northern Rock chose to address these concerns by establishing the Northern Rock Foundation, which funded community-based projects. At its Stock Exchange flotation on 1 October 1997 (when it converted from
13589-452: The takeover go ahead, it would be allowed to bypass competition law . Alex Salmond , Scotland's First Minister , previously an economist, said of the takeover: "I am very angry that we can have a situation where a bank can be forced into a merger by basically a bunch of short-selling spivs and speculators in the financial markets." On 18 September 2008, the terms of the recommended offer for HBOS by Lloyds TSB were announced. The deal
13716-549: The taxpayer have been paid in full at penal rates of interest. That means compensation to shareholders will not be a charge on taxpayers or upon the general public because it is payable out of the surplus funds, built since nationalisation in 2008, as a result of asset disposals. The NRSAG claim that despite comparable conditions, no other failed bank was handled in this manner during the global financial crisis. Instead, other banks received full Government backing, bailouts and shareholders retained their shares. The Government has earned
13843-546: The three banks including Barclays . In 2015, an investigation by the Prudential Regulation Authority and Financial Conduct Authority blamed the failure requiring the bailout on the bank's executives, as well as being critical of the Financial Services Authority (FSA), the then-regulator. A parallel investigation into the FSA's enforcement process concluded it was too late to fine responsible executives, but up to 10 former HBOS executives could be banned from
13970-426: The trial, £28 million went through the accounts of Mills, his wife and their associated companies. […] Mills and his associates used the bank's customers and the bank's money dishonestly to enrich themselves." The police investigation, named Operation Hornet, was carried out by Thames Valley Police, whilst Anthony Stansfeld was PCC. When the trial ended, Mr Stansfeld made the following three observations. Firstly,
14097-545: The unit who have asked the police to investigated their claims. Northern Rock#2007 credit crisis Northern Rock , formerly the Northern Rock Building Society , was a British bank . Based at Regent Centre in Newcastle upon Tyne , United Kingdom, Northern Rock was originally a building society . It demutualised and became Northern Rock bank in 1997, when it floated on the London Stock Exchange with
14224-537: The worst end of expectations", and that the Lloyds board was surprised by the speed at which the losses—which were caused by the unexpectedly sharp contraction of the world economy in late 2008 and early 2009—happened. This position was confirmed by Archie Kane, a senior Lloyds executive in Scotland, in evidence to the Scottish parliament's economy committee in December 2009. On 13 February 2009, Lloyds Banking Group said that
14351-401: Was a policy well known to cause failures (see Banking School Theory of Crises under Financial Crises ) when short-term interest rates rose above long-term rates and insufficient hedging was in place. The bank was nationalised at 00:01 on 22 February 2008 following two unsuccessful bids to take over the bank, neither being able to fully commit to repayment of taxpayers' money. In doing so,
14478-430: Was accused of treating the whistle-blowers involved in the HBOS Reading fraud poorly. Customers Paul and Nikki Turner presented evidence of the fraud to the board but were ignored. Indeed, the bank tried to evict them from their home on twenty-two occasions. Sally Masterton was an accountant working for Lloyds who greatly assisted Thames Valley Police in their investigation of the fraud, codenamed Operation Hornet. She wrote
14605-416: Was announced that the bank was to be sold to a single buyer in the private sector by the end of the year. On 22 March 2011, the bank issued its first mortgage securitisation since the 2007 recession which nearly brought the bank down. On 17 November 2011, it was announced that Virgin Money was going to buy Northern Rock plc for £747 million. The sale was completed on 1 January 2012, and by July of that year
14732-672: Was based on a large site at the Regent Centre in Gosforth , Newcastle upon Tyne called Northern Rock House . It had customer contact centre operations at both North of England House in Doxford International Business Park in Sunderland and at its head office. The bank developed a site at Rainton Bridge, which it sold to Npower . Northern Rock completed the redevelopment of the Gosforth site, Northern Rock House , in
14859-402: Was concluded on 19 January 2009. The three main conditions for the acquisition were: A group of Scottish businessmen challenged the right of the UK government to approve the deal by over-ruling UK competition law, but this was rejected. The takeover was approved by HBOS shareholders on 12 December. Prime Minister Gordon Brown personally brokered the deal with Lloyds TSB. An official said: "It
14986-568: Was considering selling its 60% stake in St James's Place Wealth Management to raise around £1 billion. In April 2013, Lloyds sold its loss-making Spanish retail operation—originally Banco Halifax Hispania —and the local investment management business in Spain to Banco de Sabadell . Lloyds will receive a 1.8% stake in Sabadell worth about €84 million and an additional sum of up to €20 million over
15113-428: Was created in 1985 by an Act of Parliament that merged all the remaining savings banks in England & Wales as TSB Bank plc and in Scotland (except Airdrie Savings Bank ) as TSB Scotland plc. In 1995, Lloyds Bank plc merged with TSB Group plc, forming Lloyds TSB Group plc. In 2000, the group acquired Scottish Widows , a mutual life-assurance company based in Edinburgh, in a deal worth £7 billion. This made
15240-502: Was currently government owned. However, there was no guarantee that if Northern Rock was to fail that the government would top-up any compensation over and above the standard £85,000 offered by the Financial Services Compensation Scheme . Former shareholders and hedge funds also took legal action in January 2009 to get compensation for their shares; the shareholders lost the case. They also lost their appeals in
15367-420: Was dismissed, and his concerns not acted on. In March 2008, HBOS shares fell 17 percent amid false rumours that it had asked the Bank of England for emergency funding. The Financial Services Authority conducted an investigation as to whether short selling had any links with the rumours. It concluded that there was no deliberate attempt to drive the share price down. On 17 September 2008, very shortly after
15494-403: Was formed by the 2001 merger of Halifax plc and the Bank of Scotland . The formation of HBOS was heralded as creating a fifth force in British banking as it created a company of comparable size and stature to the established Big Four UK retail banks. It was also the UK's largest mortgage lender. The HBOS Group Reorganisation Act 2006 saw the transfer of Halifax plc and Capital Bank plc to
15621-430: Was partly funded by an increase in the government loan and a reversal of previous strategy to pay the loan off as quickly as possible by actively encouraging mortgage customers to leave when their mortgage deal matured. The reason for this change was government policy to increase the availability of credit. This £14 billion was to be split into £5 billion in 2009 and £9 billion in 2010. Potential buyers for
15748-466: Was sentenced to four and a half years, and Alison Mills and Cartwright were given three-and-a-half-year sentences for money laundering. Following the convictions, the BBC reported: "Businessmen Bancroft and Mills arranged sex parties, exotic foreign holidays, cash in brown envelopes and other favours for Scourfield between 2003 and 2007. In exchange for the bribes, Scourfield would require the bank's small business customers to use Quayside Corporate Services,
15875-600: Was sold to Cerberus Capital Management in 2016. As of May 2024 the Northern Rock Shareholder Action Group are continuing their campaign to obtain compensation for the shares that were taken over by the Government when the bank was nationalised during the 2007–2008 financial crisis. Northern Rock Building Society was formed in 1965 by the merger of two North East of England building societies, both of which were based in Newcastle-upon-Tyne:
16002-407: Was then announced in mid-November, with the caveat that he would remain with the group until it established independent funding or was purchased. Four non-executive directors, Sir Derek Wanless, Nichola Pease, Adam Fenwick and Rosemary Radcliffe also resigned. A month later, Applegarth left and former Marketing Director, Andy Kuipers, was appointed Chief Executive. Kuipers had been with the bank since
16129-403: Was unqualified to provide. Several members of Quayside's staff had criminal records for embezzlement. Customers were allegedly inappropriately pressured to take on excessive debt burdens and to make acquisitions benefiting Quayside. On 30 January 2017, following a four-month trial, former HBOS employees Scourfield and Mark Dobson were convicted of corruption and fraud involving a scheme that cost
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