WHO IS 'James R. Crosby'

James R. Crosby was the CEO of Halifax Plc and its successor, HBOS Plc, from 1998 to 2006. Crosby trained as an actuary and joined Halifax Building Society in 1994 as a managing director. Through the acquisition of two insurance companies, Crosby helped turn Halifax from a mortgage bank into a broader financial services company.

In 2001, Crosby engineered a merger between Halifax and the Bank of Scotland, creating HBOS. HBOS was a leader in its sector in 2003, although it was experiencing financial trouble from bad loans. The bank ended up collapsing in 2008, and Lloyds TSB, one of HBOS' main competitors, took over HBOS in 2009 to form Lloyds Banking Group.

BREAKING DOWN 'James R. Crosby'

James R. Crosby was born in 1956 in Leeds, in northern England. While still attending Oxford University, in 1977 he began working for with the life insurance company Scottish Amicable. After college, he continued at the firm, first as a fund manager and eventually rising to become investment director and head of overseas equities.

He joined the Halifax Building Society in 1994 to set up a life insurance arm for the mortgage bank. As a managing director and later the financial services and insurance director, he scored such coups as the acquisition in 1996 of Clerical Medical, a mutual insurer, and of Equitable Life in 2001 (beating out General Electric). Through these and other deals and business partnerships, Crosby transformed Halifax from a successful mortgage bank into a leading financial-services firm with a diversified portfolio that included life insurance, mortgage, and other financial products.

The culmination of his career came with the 2001 merger of Halifax with the Bank of Scotland to create HBOS – a deal valued at £30 billion. The new financial institution, with Crosby as its CEO, became one of the top four banking conglomerates in the United Kingdom. In July 2003, HBOS was ranked as the top firm in European financial sales, with revenues of €30.3 billion. Cross-selling and portfolio diversification, or the ability to rely on a variety of products for revenue generation, became emblematic of the way HBOS conducted business after the merger.

Fall of HBOS

As early as 2002, reports began circulating that HBOS was in trouble, due to bad loans. Britain's Financial Services Authority (FSA), which regulates the UK's financial service providers (and on whose practitioner panel Crosby served) conducted a risk assessment, and increased the bank's capital requirement. Yet nothing substantially changed at HBOS. In 2006, Crosby received a knighthood, and stepped down from HBOS. The next year, he appointed to the role of deputy chairman of the FSA.
Then, in July 2008, HBOS revealed that its six-month profits had fallen 72%. A major sell-off of shares occurred, and the stock collapsed. In September, Lloyds TSB announced it was acquiring HBOS. Early in 2009, Paul Moore, HBOS' former head of risk, told the House of Commons' Treasury Select Committee that he'd been fired by Crosby five years earlier for warning that the bank was engaging in excessively risky lending behavior.
Crosby was forced to resign from the FSA, and criticized for the high pension he was receiving (£580,000 annually) despite the HBOS' dire condition – Lloyds revealed that its acquisition had £11 billion in losses on its books (and it would be needing a government bailout as a result). He offered to give back about one-third of the pension, renounced his knighthood, and left his position on the on the board of catering company Compass. In April 2013, the Parliamentary Commission on Banking Standards assigned the primary responsibility for the collapse of HBOS to Crosby, along with his successor as CEO, Andy Hornby, and HBOS chairman Dennis Stevenson.

Other Roles

Crosby had also been an adviser to former British Prime Minister Gordon Brown in 2006. He currently is a non-executive director of television company ITV, and a trustee of charity Cancer Research UK.

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