Extended-form Case Study

Strategic risk management: the case of HBOS

Published on March 29, 2017   22 min

Other Talks in the Series: Hot Topics

0:00
Hello, my name is Pat McConnell, an Honorary Fellow at the Macquarie University of Applied Finance Centre in Sydney, Australia. In this session, I'm going to talk about the topics of strategic risk in general and the collapse of Halifax Bank of Scotland or HBOS in particular.
0:16
On September 18th, 2008, Halifax Bank of Scotland or HBOS was purchased by Lloyds Bank at the direction of the UK government. It was the largest failure of a bank in the UK to that point and has cost the UK taxpayer over 20 billion pounds so far. But although the failure was precipitated by the global financial crisis, it was not the root cause, in fact, HBOS had not made too many bad loans. The root cause was a flawed strategy. At the time, much of the blame for the collapse of HBOS was based on youthful and relatively untested CEO, Andy Hornby, a marketing whiz kid hired from the giant retailer Asda. However, the seeds of the collapse had been sown well before Mr. Hornby had been hired as CEO. In 2004, the bank's regulator, the Financial Services Authority had warned that the bank was "an accident waiting to happen."