LONDON: Britain’s financial watchdog has fined Lloyds Banking Group $57.69 million (£45.5 million) for failures at its HBOS Reading unit to disclose suspicions of fraud.
Halifax Bank of Scotland (HBOS) was involved in one of Britain’s biggest ever banking frauds in the early 2000s, which saw some of its bankers enrich themselves at the expense of struggling business clients, some of whom succumbed to insolvency after being advised to borrow unsustainable amounts.
HBOS was rescued in a state-engineered takeover by Lloyds in 2009. The Financial Conduct Authority (FCA) says HBOS identified suspicious conduct in Reading in early 2007 but did not tell the regulator until 2009, the year Lloyds acquired the bank.
Six people including two former HBOS bankers were jailed in 2017 for a combined 47 years for their role in the fraud.
The FCA said HBOS failed to be open and cooperative and failed to disclose information appropriately to the then regulator, the Financial Services Authority (FSA).
The bank’s failures caused delays to investigations by both the FCA and Thames Valley Police, said Mark Steward, the FCA’s executive director of enforcement and market oversight.
“There is no evidence anyone properly addressed their mind to this matter or its consequences,” Steward said.
Lloyds Banking Group said it welcomed the FCA’s “comprehensive investigation” and accepts the findings of past disclosure failure associated with fraud at HBOS in Reading.
“The Group accepts the findings, has agreed to pay a fine of £45.5 million and apologizes once again to customers affected by the fraud itself,” the bank said in a statement.