How did they get away with it? The outrage among the audience at the Edinburgh International Book Festival on Thursday 15 August was palpable.
Journalists Ray Perman and Ian Fraser were discussing how the senior managements of HBOS and the Royal Bank of Scotland brought their banks to the brink of collapse and went unpunished. Scotland lost its two most venerated financial institutions and the after-shocks are still being felt north of the border. Lloyds bank took over HBOS in 2009 the same year the government bailed out RBS and today holds 81 Per Cent of its shares.
Perman's book, "Hubris: how HBOS wrecked the best bank in Britain", explains how the bank's need to expand its deposit base and protect it from take-over led to the disastrous merger with Halifax Building society. Halifax's aggressive management style changed the bank into a predatory selling machine taking reckless risks to maintain profits.
"Shredded",Ian Fraser book, is to be published in November. The title refers to Fred Goodwin, the Royal Bank of Scotland's then Chief Executive nicknamed "Fred the shred". He dominated his management team and would not tolerate criticism, Fraser said. "No one would stand up to Fred."
RBS was impatient for growth as Goodwin aimed to grow the bank to rival HSBC and bought the dutch bank ABM-Amro in 2007 to burden the Scottish bank with overwhelming debt. But many senior figures in the bank as well as politicians bear responsibility for allowing the finances of the bank to deteriorate, according to Fraser.
Ray Perman told the story of the senior HBOS banker who lost 95 per cent of the value of his employee shares in the bank and now spends his time organising children's parties. Perman got the first tip-off of trouble at the bank when a businessman at a dinner told him he was withdrawing 20m pounds from HBOS to put it "somewhere safe."