HBOS facts for kids
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| Industry | Finance and Insurance |
|---|---|
| Fate | Acquired by Lloyds TSB |
| Founded | 2000 |
| Headquarters | |
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Key people
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James Crosby & Andy Hornby (former Chief Executives) Lord Stevenson of Coddenham (Chairman) |
| Products | Financial services |
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Number of employees
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72,000 |
| Parent | Lloyds Banking Group |
| Subsidiaries | Bank of Scotland plc, HBOS Australia, HBOS Insurance & Investment Group |
HBOS plc was a large banking and insurance company in the United Kingdom. It became part of the Lloyds Banking Group in January 2009. HBOS was the main company for Bank of Scotland plc and Halifax brands in the UK. It also included HBOS Australia and a group that handled insurance and investments.
HBOS was created in 2001 when two big companies, Halifax plc and the Bank of Scotland, joined together. This merger was a big deal because it made HBOS one of the largest banks in the UK. It was also the biggest lender for home mortgages in the country. Even though "HBOS" wasn't officially short for anything, most people thought it stood for Halifax Bank of Scotland.
The main office for HBOS was in Edinburgh, Scotland. This was the old head office of the Bank of Scotland. Its main operations office was in Halifax, England. On January 19, 2009, Lloyds TSB bought HBOS. This made HBOS a part of the Lloyds Banking Group. Lloyds Banking Group said they would keep using the Edinburgh office for their Scottish operations. They also continued to print Scottish bank notes.
Contents
How HBOS Started
HBOS was formed in 2001. This happened when Halifax and Bank of Scotland merged. Halifax had become a public company just four years before this merger.
Changes to the Bank
In 2006, HBOS made some legal changes to its structure. This allowed the Bank of Scotland to become a public limited company, called Bank of Scotland plc. This new company became the main banking part of HBOS. The Halifax brand name was kept, and Halifax then operated under the Bank of Scotland's UK banking license. These changes officially took place on September 17, 2007.
Financial Challenges in 2008
In 2008, there were many worries about banks around the world. HBOS faced some big challenges. In March 2008, rumors caused HBOS shares to drop a lot. The financial regulators looked into this but found no deliberate attempt to harm the bank.
However, on September 17, 2008, HBOS's share price changed wildly. This was shortly after another big bank, Lehman Brothers, failed. Because of these worries, the BBC reported that HBOS was talking about being bought by Lloyds TSB. This deal would create a very large "superbank." HBOS later confirmed these talks.
To prevent HBOS from having bigger problems, the UK government said the takeover could happen quickly. They allowed it to bypass normal rules about competition. Alex Salmond, Scotland's First Minister, was upset. He felt the bank was forced into a merger by financial speculators.
Lloyds TSB Takes Over
On September 18, 2008, the details of the takeover by Lloyds TSB were announced. The deal was completed on January 19, 2009. The takeover needed approval from shareholders of both HBOS and Lloyds TSB. The UK government also had to allow it to happen without competition law issues.
A group of Scottish business people tried to challenge the government's decision. However, their challenge was rejected. HBOS shareholders approved the takeover on December 12. Prime Minister Gordon Brown personally helped arrange the deal.
After the takeover, Lloyds Banking Group announced that HBOS had lost a lot of money in 2008. The former chief executive of HBOS, Andy Hornby, and its former chairman, Lord Stevenson, spoke to a committee about the bank's problems. Hornby said he was very sorry for what happened at HBOS.
Government Help for Banks
On October 13, 2008, the UK government announced a plan to help banks. This was to prevent a major financial crisis. The government decided to put money into banks like Royal Bank of Scotland Group Plc, Lloyds TSB, and HBOS Plc. This was to make sure they stayed stable. The government said this was not full public ownership. They expected the banks to return to private investors later.
Investigation into HBOS
In 2015, an investigation looked into why HBOS had problems and needed government help. The investigation found that the bank's leaders were to blame. It also criticized the financial regulator at the time. The investigation found that the bank's board did not balance risk and reward well enough. They also lacked enough banking experience.
The bank's strategy focused too much on growing quickly and making short-term profits. This led to the bank taking on too much risk, especially in commercial real estate. The board and other control teams did not challenge these decisions enough. These weaknesses made HBOS very vulnerable to financial shocks. This led to the bank's eventual failure.
In 2017, another investigation looked into how HBOS handled fraud claims at one of its branches. On June 21, 2019, the Financial Conduct Authority fined the Bank of Scotland a large amount of money. This was because the bank failed to report suspicions of fraud at its Reading branch. This failure risked harming justice. The bank received a reduced fine because it agreed to settle the matter.
How HBOS Operated
HBOS ran its business through three main parts:
- Bank of Scotland plc
- HBOS Australia
- HBOS Insurance & Investment Group Limited
Bank of Scotland plc
This was the main banking part of the HBOS group. It operated many different brands:
In the United Kingdom
- Bank of Scotland
- Bank of Scotland Private Banking
- Birmingham Midshires
- Halifax
- Capital Bank plc
- AA Savings
- Halifax Share Dealing Limited
- Intelligent Finance
- Sainsbury's Bank (50% owned, later sold)
- The Mortgage Business (TMB)
- Blair, Oliver & Scott (for debt recovery)
- St James's Place Bank
Around the World
- Banco Halifax Hispania (later became Lloyds Bank International)
- Bank of Scotland Corporate
- Bank of Scotland International (later became Lloyds Bank International)
- Bank of Scotland (Ireland) (closed in 2010)
- Bank of Scotland, Amsterdam branch
- Bank of Scotland, Berlin branch
HBOS Australia
HBOS Australia was created in 2004 to manage the group's businesses in Australia. It included:
- Capital Finance Australia Limited
- BOS International Australia Ltd
In 2008, HBOS Australia sold some of its businesses to Commonwealth Bank of Australia. In 2013, the rest of HBOS's businesses in Australia were sold to Westpac.
HBOS Insurance and Investment Group Limited
This part of HBOS managed the group's insurance and investment brands in the UK and Europe. It included:
- St James's Place Capital (60% owned)
- Halifax General Insurance Services Ltd
- St Andrew's Group
- Clerical Medical
It also used to own an investment manager called Insight Investment Management Limited. This company was bought by The Bank of New York Mellon in 2009.
See also
In Spanish: HBOS para niños
