All the day’s economic and financial news, including the long-awaited publication into the collapse of HBOS during the financial crisis
Breaking: Executives could face further enforcement action
Regulators also blamed for bank’s failure
Introduction: HBOS report finally released
12.38pm GMT
Andrew Tyrie MP, who chairs parliaments’ Treasury Committee, has called for regulators to decide quickly whether any HBOS bosses should be sanctioned.
“The Parliamentary Commission on Banking Standards asked the regulators to consider whether any former members of HBOS’s senior management should be subject to investigation proceedings with a view to prohibition. At the request of Parliament’s specialist advisers, the job of responding was passed to Andrew Green QC. We now have his clear answer. They should be.
“Better late than never. What’s more, Mr Green concludes that the FSA should have got on with this in 2009. And he has come to this view, not with the advantage of hindsight, but by basing his conclusions on the material available to the FSA at that time.
"Better late than never" says MP Andrew Tyrie of the HBOS verdict
12.32pm GMT
A pithy summary, from Newsnight’s Duncan Weldon:
HBOS report in a tweet: bad business model & management failure, FSA failed to stop but operating in a political context of "light touch".
12.32pm GMT
The regulatory structure put in place by the last Labour government contributed to the crisis, says the report.
It is now clear that the FSA’s pre-crisis approach to prudential supervision was not appropriate for the purpose of meeting its market confidence objective.
However, the FSA was responsible for a broad range of financial regulation issues and was expected to regulate within established global standards.
12.30pm GMT
The report lays out the key reasons why HBOS’s risky lending and flawed strategy meant it was survive the financial crisis:
12.26pm GMT
The report doesn’t spare the regulators’ blushes either.
It says that the Financial Services Authority had identified the key risks which HBOS faced -- but had then failed to take appropriate steps to mitigate these risks effectively.
Supervisors need to employ their judgement and take appropriate actions in response where necessary.
A particular challenge is to intervene sufficiently early when a firm is apparently successful but supervisors can identify weaknesses that are sufficiently important to pose a threat to the firm that is inconsistent with the objectives of supervision. HBOS was such a firm
12.23pm GMT
The report has no time for the suggestion that HBOS was simply unlucky -- sunk by a once-in-a-lifetime financial crisis.
Its top managers should have been better prepared, it says:
The management of a firm is not required to have perfect foresight. The criticism in the Report is not that management failed to predict that there would be a global financial crisis. Rather, they should have put in place strategies that could in combination accommodate and respond to, in a timely way, changes in external circumstances.
12.21pm GMT
The paradox of the HBOS story is that the bank was generally seen as a success, until close to its collapse, says the BoE’s Andrew Bailey:
The 2001 merger of Halifax and Bank of Scotland had yielded double-digit profit growth in all but one of the years up to end-2006 and analysts’ and brokers’ views were positive at least until early 2007.
But, by this time, the seeds of the firm’s destruction had already been sown as a flawed strategy led to a business model that was excessively vulnerable to an economic downturn and a dislocation in wholesale funding markets.
12.19pm GMT
The 400-page report is online here:
12.16pm GMT
Andrew Bailey, deputy governor of the Bank of England, says HBOS simply didn’t understand what it was getting into.
“The story of the failure of HBOS is important both to provide a record of an event which required a major contribution by the public purse, and because it is a story of the failure of a bank that did not undertake complicated activity or so-called racy investment banking.
HBOS was at root a simple bank that nonetheless managed to create a big problem.”
12.13pm GMT
Here’s Jill’s early news story, which she’ll be adding to through the afternoon:
Related: HBOS collapse: report recommends formal investigation into former executives
12.12pm GMT
The former regulator, the Financial Services Authority, has also been criticised.
The report founds that:
Flaws in the FSA’s supervisory approach meant it did not appreciate the full extent of the risks HBOS was running and was not in a position to intervene before it was too late.
12.10pm GMT
The HBOS review has also concluded that “ultimate responsibility for the failure of HBOS rests with the Board and senior management”.
It says that:
they failed to set an appropriate strategy for the firm’s business and failed to challenge a flawed business model which placed inappropriate reliance on continuous growth without due regard to risks involved.
12.08pm GMT
Our City editor Jill Treanor has spent the morning digesting the report.
She is tweeting that those bankers running HBOS before the crash could now be investigated, and potentially banned from the City.
City regulators told it is the public interest to conduct through investigation into former senior executives of HBOS
Lord Stevenson, former HBOS chair , bears “responsibility individually and collectively and as board member for the failings of the board”
FSA concluded in 2010 Andy Hornby, former HBOS CEO, could have been investigated but decided against launching formal investigation
Former FSA official Clive Adamson told the HBOS investigation: “the people most culpable were let off”
12.03pm GMT
The reports are out!
And they are recommending that regulators should consider bringing fresh charges against those responsible for the failure of HBOS.
As part of the Review, Andrew Green QC was asked to provide an independent assessment of whether the decisions taken on enforcement by the former regulator, the FSA, were reasonable.
The PRA and FCA are therefore also today publishing Andrew Green QC’s report into the FSA’s enforcement actions following the failure of HBOS.
11.50am GMT
Here’s a fateful photo from September 2008, showing HBOS CEO Andy Hornby alongside Lloyds chairman Sir Victor Blank.
11.42am GMT
You can get up to speed on the HBOS affair, and relive the financial crisis, with this timeline:
Related: HBOS timeline: the countdown to collapse
11.41am GMT
We’re actually getting two reports today.
As well as the main inquiry into the collapse of HBOS, a top lawyer has examined why only one executive - director Peter Cummings - was ever sanctioned over the crisis.
11.29am GMT
The collapse of HBOS was one of the most dramatic events in the wild autumn of 2008, when the failure of Lehman Brothers triggered global panic.
Like Royal Bank of Scotland (which was also bailed out), HBOS epitomised the boom that grew in the UK financial sector at the start of the decade.
11.10am GMT
The official investigation into the collapse of HBOS in 2008 is about to be released.
At noon precisely, Britain’s Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) will issue their report on the bank’s 2008 collapse.
10.58am GMT
Back in Greece, Syriza MP Gabriel Sakellaridis has quit rather than support the government in tonight’s austerity vote (as explained in earlier post).
This is a blow to Alexis Tsipras’s government, as it struggles to implement its unpopular third bailout.
#SYRIZA MP #Sakellaridis gives up seat in parliament after Tsipras' request, says 'cannot contribute to the implementation of govt policy'
Insiders are now speaking of a “mini government crisis.”
Gavriel Sakellarides’ resignation is all the more poignant for the fact that he was the former government spokesman and a very close ally of Tsipras.
storm in a wine cup: at least one #ANEL MP the ever bizarre Nikos Nikolopoulos refusing to endorse multi-bill in 2night's vote
#Greek government's majority is likely to be reduced w expected desertions after tonight's vote on latest EU-mandated measures
10.29am GMT
European stock markets have hit levels last seen before China’s Black Monday crash in August.
This morning’s rally has pushed the Stoxx 600 index of leading European shares up by 1.1%, to a three month high.
“We have had an interesting FOMC minutes and risk assets have rallied across the board with the dollar weaker and EM [emerging market assets] leading the way.”
“That is the success of the Fed really. We expect they will hike in December but then proceed slowly after that and that has soothed markets.”
9.42am GMT
WorldFirst’s Jeremy Cook is first to react to the weak UK retail sales report:
“Retail sales in October are always a strange one – unable to benefit from the ‘back to school’ rush and unlikely to see too many Christmas shoppers and hence can see a slight slip in expenditure.
This year is no different given September’s number was boosted by strong spending around the Rugby World Cup and warm weather and we have seen a natural pause on the nation’s High Streets before the manic festive season begins.”
9.40am GMT
Just in - UK retail sales declined month-on-month in October, even though shops continue to cut prices.
The Office for National Statistics reports that retail sales volumes shrank by 0.6% compared with September, while the amount spend fell by 0.7%.
*U.K. OCT. RETAIL SALES EXCL. FUEL FALL 0.9%; EST. 0.6% DROP
9.29am GMT
A very chatty Praet repeats that the #ECB is ready to act, members are having "rich discussions" and rate cuts are part of the toolbox.
9.28am GMT
The European Central Bank’s chief economist is dropping a strong hint that monetary policy will indeed be eased next month.
Peter Praet is telling an audience in Frankfurt that downside risks are prevailing in the eurozone, with price pressures subdued and investment still depressed.
Peter Praet sees "confirmation" of downside risks in global economy. Easing in December a done deal, in case there was any doubt left.
ECB's Peter Praet says lower bound for interest rates "may be lower than we thought months or years ago"
9.17am GMT
We’re just seeing reports that a Greek government MP has been ordered to resign, after saying he wouldn’t support the austerity measures being voted on tonight.
If Gavriil Sakellaridis steps down, he could be replaced by a new Syriza candidate.
#Greek PM @atsipras asks lawmaker @gabriel_athens to quit #Greece
#Tsipras asks SYRIZA MP Gavriil Sakellaridis to resign following reports that he plans to abstain from tonight's parl't vote via @geoterzis
Wow! https://t.co/xX7Tvzg11W
9.12am GMT
Nothing is ever easy in Greece, when bailout funds are involved.
And over in Athens, the government is racing to tweak its latest austerity plan after some MPs protested against raising the tax on (gulp) wine.
According to sources, the new proposal is likely to propose a smaller tax on wine (of 0.15 euros rather than the 0.30 euros originally mooted) along with another measure to cover the difference.
8.56am GMT
It feels like a December US interest rate hike is in the bag. Which means investors can move on to pondering other things, like the eurozone.
The ECB could well ease monetary policy next month -- boosting its QE programme, and hitting banks with more negative interest rate to force them to lend.
It is becoming clear that the most important Central bank meeting in December is not that of the Federal Reserve but instead the European Central Bank on December 3rd.
Even then we are having difficulty pricing expectations; while traders are pricing in a 10bps cut in the deposit rate with 100% certainty and a 20bps cut to about a 50% certainty there is no real way of pricing in increases in quantitative easing.
World First Morning Update September 19th - December is a given, after is a puzzle - https://t.co/Olc0fi1VJj
8.39am GMT
Mining stocks are helping to drive European markets higher this morning.
Markets are clearly liking the US central bank’s faith in US economic recovery and belief in a gentle ‘testing of the water’ first move towards policy normalisation, whilst peers are doing the exact opposite, will not derail economic recovery or deliver market mayhem.
Just that little bit more certainty goes a long way.
8.27am GMT
Good news for anyone who took part in Royal Mail’s flotation in 2013 -- shares are up 4.5% this morning.
Demand for parcels and mail in the UK and Europe, pricing and cost pressures, upcoming union negotiations on wages and productivity, higher cash pension costs and regulatory risk with an on-going review of the UK mail market by the regulator Ofcom.
8.15am GMT
Poundland has been relegated to the bargain bin this morning, after the discount retailer’s latest results failed to impress.
8.10am GMT
#Germany's Dax jumps above 11k as markets reacted w/ calm to Oct FOMC minutes which pointed to a liftoff in Dec. pic.twitter.com/KooBuArY6S
8.09am GMT
A solid start to trading in Europe has seen the FTSE 100 rise by 0.5%, or 32 points, to 6311.
The German DAX is up almost 1%, with France’s CAC gaining 0.7%.
Markets received further confidence following the highly anticipated FOMC minutes release that the Federal Reserve will finally begin to raise US interest rates in December.
The comment that “it may well become appropriate” to raise US interest rates in December installed confidence among investors, especially considering that this meeting took place before the exceedingly impressive employment report released at the beginning of this month.
7.55am GMT
Asian stock markets have jumped overnight, as expectations grow that the US central bank is ready to raise interest rates.
Shares rallied in Tokyo, Shanghai, Hong Kong and Sydney after the minutes of last month’s Federal Reserve meeting showed that most policymaker believe the US economy could handle higher borrowing costs from December.
Related: Interest rate hikes likely in December, Federal Reserve minutes reveal
“If - when - they lift rates in December, the Fed will likely be very aggressive in highlighting the idea of a very gradual pace.”
7.33am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Former HBOS executives will learn whether they face fresh investigations into their conduct in the run up to the bank’s near collapse in 2008.
Thursday’s publication of the much-delayed and long-anticipated report into what went wrong at the bank will be published alongside an opinion commissioned by the regulators into the decision in 2012 to only punish one former executive.
Related: HBOS's former bosses wait to learn their fate
FOMC minutes signalled that a notable number of Fed officials believe that the US economy is now ready for interest rates to be lifted
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