Halifax Bank of Scotland

Profile from Corporate Watch:

Formed from the merger of the Halifax building society and Bank of Scotland in 2001, and head quartered in Edinburgh, HBoS ranks third in the list of Scotland's top 500 companies and is the seventh largest bank in Europe.^[1] The company employs around 68,000 staff.

HBoS subsidiaries also include considerable interests in Australia where it is said to have expansion plans:26 Bank of Western Australia Ltd, BankWest, Capital Finance and St Andrews Insurance; and UK companies Clerical Medical, Birmingham Midshires, Capital Bank, Godfrey Davis, Lex Vehicle Leasing, Hill Hire Plc, BM Solutions; The Mortgage Business; Rightmove; First Alternative; Esure; Employee Share Services; Mentor Professional Services; St Andrews Group, St James's Place Bank, St James's Place Capital Plc, and of course Banco Halifax Hispania, Bank of Scotland (Ireland) and Bank of Scotland (The Netherlands).

The HBoS is one of the largest commercial sponsors of sport and the arts in Scotland, to the tune of £19.5 million in 2003, and is best known for its sponsorship of the Scottish Premier League.

HBoS investments

Unlike the Royal Bank of Scotland, HBoS is less involved in overseas project finance. Since 2002 the Bank of Scotland consolidated its position as a leader in PPP/PFI type finance, bringing the first such deal to France as a partner in the construction of a new motorway.27 In 2004 it won a major share in an Australian PFI initiative, another road-building project.28 In 2004 the Bank of Scotland part-funded a £35m PPP/PFI deal with the City of Edinburgh Council for the Edinburgh Schools Partnership for the design, construction, financing and operation of 4 schools.^[2]

In Glasgow the 3ED consortium, involving the Miller Group construction company, the Halifax bank (now HBoS) and Hewlett Packard computers, will organise construction and retain operational control of the school buildings for the next 29 years. The city council will rent the buildings from 3ED for an annual fee of £40.5 million, an arrangement that is guaranteed to continue for the next 30 years, allowing 3ED to re-coup £1.2bn. This move had been prepared for by the closure of 9 secondary schools in Glasgow, with a population of 30,000 pupils.

HBoS finances Wood McKenzie, a Scottish oil and gas consultancy firm also involved in Caspian oil and gas.^[3]

In 2002 HBoS financed Philip Green's take-over of Arcadia, the retail group which owns high street brands such as Topshop, Miss Selfridge, Dorothy Perkins and Burtons.^[4] No Sweat UK has reported union repression and low wages in this group. Factories in London's Whitechapel producing goods for Arcadia were found to be paying substantially under the minimum wage, and other UK suppliers claimed that the company paid so little that they could not provide better wages or working conditions. In Bombay in 2002 there were reports of intimidation of union members, including harassment, physical assault and reduced work.^[5] In 2004, Philip Green wrote himself a cheque for £460 million as a result of profits from Arcadia,^[6] and the remainder went to HBoS, which holds the other 8% of the company.^[7]

HBoS and 'ethical investment'

In 2002 HBoS launched asset manager, 'Insight Investors', which later that year started up an 'Investor Responsibility Service' which aimed to make it easier for 'institutional investors to demonstrate a commitment to addressing corporate responsibility issues, without compromising their financial objectives.'^[8] Rather than limiting the companies in which it invest, Insight Investors favours the 'constructive engagement' approach, hosting conferences and organising meetings. Thus, rather than withdrawing investment from environmentally destructive energy and mining companies,it invites senior managers to seminar about, for example, biodiversity and management of fragile ecosystems.^[9] The major companies invested in include: BAE Systems, BP, British Airways, Cairn Energy, Cadbury Schweppes, Diageo, Easyjet, GlaxoSmithKline, J Sainsbury's, Marks and Spencer's, Safeway, Scottish and Southern Energy, ScottishPower, Shell, Tesco, Tullow Oil and Unilever.^[10] The actual benefit of such investment in changing companies' ethical behaviour has yet to be demonstrated.

HBoS failing its poorer customers

The Guardian reported that in November 2004, HBoS began charging up to £1.75 for cash withdrawals from its cash machines. This will hit lower income customers hardest especially those who have to use cash machines to withdraw benefits and pensions. With the closure of so many post offices in recent years, withdrawing benefits from cash machines is becoming more and more common.^[11]

HBoS and accounting mismanagement

HBoS was fined £1.25 million in January 2004 for failing to protect against money laundering - they conducted an internal survey in 2002 and could not find records of necessary customer identification documents in 55% of cases.^[12] This is an astonishing statistic, suggesting that although the bank should have scrutinised all their customers’ accounts when money laundering legislation came into force, it did not do so.

People

The Chairman of the Board is Dennis Stevenson. In addition there are five executive directors and eight non-executive directors, including Sir Ronald Garrick who is the deputy chairman.

• Dennis Stevenson

=Executive directors

James Crosby Born in 1956, James joined Scottish Amicable in 1977 and spent 10 years as a fund manager followed by senior positions in IT, marketing, finance and corporate development. He led the establishment of the joint venture with J Rothschild Assurance (1991) of which he was a Director until 1994. In 1994 he joined Halifax Building Society as Managing Director, Halifax Life and following the acquisition of Clerical Medical in 1996 he became Financial Services and Insurance Director of Halifax plc. On 1 January 1999 James was appointed Chief Executive of Halifax and also became a Director of St. James's Place Capital plc in June 2000. In September 2001, following the merger of Bank of Scotland and Halifax, James became Chief Executive of HBOS plc. James is a Non-executive director of ITV plc and the Financial Services Authority. James is a Fellow of the Faculty of Actuaries. Phil Hodkinson Phil Hodkinson Born in 1958, Phil joined Allied Dunbar in 1984 and became Managing Director before moving to Eagle Star Life as Chief Executive. Phil has run the UK life business of Zurich Financial Services and was the founder of Zurich's UK Enterprise portfolio of new insurance, banking and e-commerce operations. He was appointed Chief Executive of the Insurance & Investment Division of HBOS plc in September 2001, and became Group Finance Director in March 2005. He is Chairperson of the HBOS Foundation, a director of Business in the Community and a Fellow of the Institute of Actuaries. Andy Hornby Andy Hornby Born in 1967, after graduating from Oxford Andy joined the Boston Consulting Group where he spent three years working on a range of projects, principally in the media and retail sectors. He then went to Harvard, where he obtained his MBA. On his return, Andy joined Blue Circle, where he held a number of senior line management roles. He moved to ASDA in 1996 and held numerous roles including Director of Corporate Development, Retail Managing Director and finally Managing Director of George, ASDA's clothing business. Andy joined Halifax on 1 November 1999 as Chief Executive, Halifax Retail and was appointed to the Board on 18 November 1999. Following the merger of Bank of Scotland and Halifax in September 2001, he became Chief Executive of the Retail Division of HBOS plc. On 1 July 2005 Andy was appointed Chief Operating Officer. He is also a Non-executive Director of GUS plc. Colin Matthew Colin Matthew Born in 1950, Colin joined Bank of Scotland in 1966 and in 1991 was appointed Divisional General Manager, UK Banking-England. In 1994 he was appointed to the Bank of Scotland's Management Board as General Manager with responsibility for Bank of Scotland Treasury Services plc. In April 1999, Colin became a member of Bank of Scotland's Group Management Board and was appointed Divisional Chief Executive of Business Banking before being appointed a Director of Bank of Scotland in May 2000. Following the merger of Bank of Scotland and Halifax in September 2001, Colin became Chief Executive of the Business Banking Division of HBOS plc, and as of 1 January 2004, is now Chief Executive of Strategy and International Operations. Colin is a Fellow of The Chartered Institute of Bankers in Scotland.

Peter Cummings Born in 1955, Peter joined Bank of Scotland in 1973 and following a period in a number of branches in West of Scotland was appointed p.a. to the Chief Manager, Glasgow Chief Office. From 1985 to 1990 Peter was appointed Advances Manager Corporate Division involved in Management Buyouts, Large Corporate transactions including property transactions. During this period Peter was seconded full time to undertake an MBA at Strathclyde University. On Peter’s return to the Bank he was appointed Head of Corporate Recovery, a position he held until 1993 when he was appointed Regional Manager for the development of business in North of England. During 1995 Peter was appointed Director of Corporate Banking leading a Structured Finance team in Glasgow. The team’s main responsibility was to write MBO business. Peter held this position widening the remit to accommodate major Corporate Relationships until his present role as Managing Director of Corporate, which incorporates Integrated, Structured, Acquisition Finance, Joint Ventures and Equity. Peter was appointed Deputy Chief Executive, Corporate on 1st July 2005 and became Chief Executive of Corporate on 1st January 2006."

Non-Executive Directors

Sir Ronald (Ron) Garrick Born in 1940, Sir Ron was Chairman of the Weir Group PLC between January 1999 and June 2002, having been Chief Executive since 1982, joining as a graduate trainee in 1962. Sir Ron was awarded the CBE in 1986 and a Knighthood in 1994 for services to industry and public life in Scotland. He was Deputy Chairman of Scottish Enterprise from 1992 to 1996 and is a former Director of Shell UK and Scottish Power plc. In September 2001, following the merger of Bank of Scotland and Halifax, Sir Ron was appointed a Non-executive Director of HBOS plc and in January 2003, he became Deputy Chairman of HBOS plc. Sir Ron is a Chartered Engineer and was appointed a Fellow of the Royal Academy of Engineering in 1984. He is Chairman of the Nomination Committee. Charles Dunstone Charles Dunstone Born in 1964, Charles is Chief Executive Officer of The Carphone Warehouse Group PLC, Europe's largest independent retailer of mobile communications equipment, which he founded in 1989. In February 2000 he was appointed as a Non-executive Director of Halifax and following the merger of Bank of Scotland and Halifax in September 2001, Charles was appointed as a Non-executive Director of HBOS plc. Tony Hobson Anthony (Tony) Hobson Born in 1947, Tony is Chairman of Northern Foods plc and a Non-executive Director of Glas Cymru Cyfyngedig and Jardine Lloyd Thompson Group plc. A Chartered Accountant, he was Group Finance Director of Legal & General Group plc for fourteen years, retiring in February 2001. He was the Senior Independent Director of Thames Water plc. Tony joined the board of Halifax in May 2001 and, following the merger of Bank of Scotland and Halifax in September 2001, he was appointed a Non-executive Director of HBOS plc and is also Chairman of the Audit Committee. Brian Ivory Brian Ivory Born in 1949, Brian was formerly Chairman of Highland Distillers plc, having been a Director since 1978. In 1988 he was appointed Managing Director of Highland Distillers and was Group Chief Executive from 1994 to 1997. He was also Chairman of Macallan-Glenlivet plc from 1996 to 1999 and Treasurer of the Scotch Whisky Association. Brian is Chairman of The Scottish American Investment Company PLC and a Director of Remy Cointreau S.A. and is also Chairman of the National Galleries of Scotland. In February 1998, Brian was appointed a Non-executive Director of Bank of Scotland and following the merger of Bank of Scotland and Halifax in September 2001, he was appointed a Non-executive Director of HBOS plc. Brian is Chairman of the Remuneration Committee. Brian is a Fellow of the Royal Society of Arts and the Royal Society of Edinburgh. He is also a Freeman of the City of London and a Companion of the Institute of Management and used to serve as a member of the Scottish Economic Council. Coline McConville

Coline McConville Born in 1964, Coline is the Chief Executive Officer, Europe of Clear Channel International Limited. She was previously with McKinsey & Co. Limited Management Consultants and The L E K Partnership, the German based Management Consultant. She started her career working for the Australian Consolidated Press in Sydney, Australia. Coline was appointed to the Board of Halifax in February 2000 and in September 2001, following the merger of Bank of Scotland and Halifax, she was appointed a Non-executive Director of HBOS plc. Kate Nealon Kate Nealon Born in 1953. Until the end of last year, Kate was Group Head of Legal and Compliance for Standard Chartered Plc. She joined Standard Chartered in 1992. Kate is a US qualified lawyer who prior to joining Standard Chartered practised international banking law in New York for many years, most recently as a partner at the California based firm of Morrison and Foerster. Kate is a Non-executive Director of Cable & Wireless, a Non-executive Director of the Independent Regulator of the NHS Trust Hospitals and a Senior Associate of the Judge Institute of Management, Cambridge University. She has spoken and written extensively on Corporate Governance and Business Ethics. Kate was appointed a Non-executive Director of HBOS plc with effect from 23 March 2004. David Shearer David Shearer Born in 1959. Until 31 December 2003, David was Senior Partner of Deloitte & Touche in Scotland & Northern Ireland, and until September 2003, a UK Board member. David was previously Director of Global Corporate Finance for Deloitte Touche Tohmatsu. David is Governor and Non-executive Director of the Glasgow School of Art. He is a Chartered Accountant and currently a member of the advisory panel to Martin Currie in respect of its developing Private Equity business. David was appointed a Non-executive Director of HBOS plc with effect from 23 March 2004.

Karen Jones Born in 1956, Karen has a strong track record of growing and managing businesses. She was previously chief executive of Spirit Group, a 2,000-strong pub and restaurant business. Spirit Group was built up from the successful acquisition of Allied Domecq in 1999 and the more recent acquisition of Scottish & Newcastle Retail in November 2003. Previously, Karen founded and developed both Cafe Rouge and the Pelican Group. Karen was appointed a Non-executive Director of HBOS plc with effect from 24 January 2006.

Notes

1. ^ Scottish Enterprise website http://www.scottish-enterprise.com/sedotcom_home/services_to_business_international/lis/about-scotland/about_scotland-keyfacts.htm last viewed 31.3.05
2. ^ 'HBoS cultivates down under for growth' Sunday Herald 28 November 2004
3. ^'Bank of Scotland Exports UK lead in PFI/PPP to Europe,' 05.07.02 www.hbosplc.com/media/pressreleases/articles/bos/2002-07-05-02.asp. Last viewed 16.3.05
4. ^Iain Dey, 'HBOS drives ahead with Australian PFI' 17/10/04 The Scotsman http://business.scotsman.com/topics.cfm?tid=497&id=1206572004
5. ^Scottish Business Insider
6. ^'Caspian & Black Sea Oil and Gas Conference 2004 Key Facts'

www.kievturk.com/?m=news&page=2&newsid=7. Last viewed 16.3.05

1. ^Julia Finch, 'Green gains £460m in Arcadia,' The Guardian 22.10.04

http://www.guardian.co.uk/business/story/0,,1333029,00.html Last viewed 23.03.05

1. ^'A Partial Victory for Bed and Bath workers,' www.nosweat.org.uk/article.php?sid=468. Last viewed 16.3.05
2. ^Julia Finch, 'Green gains £460m in Arcadia,' The Guardian 22.10.04

www.guardian.co.uk/business/story/0,,1333029,00.html Last viewed 23.03.05

1. ^Philip Green pockets £460m dividend from Arcadia http://business.scotsman.com/topics.cfm?tid=368
2. ^'Insight Investment launches investor responsibility service,' 23.11.02 www.csrwire.com/bsr/article.cgi/1422.html Last viewed 23.03.05
3. ^Insight Investment, 'Biodiversity: towards best practice for extractive and utility companies' 13.11.03 http://www.wbcsd.ch/web/projects/cement/tf5/biodiversity_consultation_document.pdf last viewed 23.03.05
4. ^'Insight's engagement and voting 2003' www.insightinvestment.com/responsibility/reporting/

select_a_company_by_event.asp?1=A&2=A&yr=2003. Last viewed 16.3.05

1. ^Philip Inman, 'Taxed at the cash machine' Philip Inman, The Guardian 27.11.04

www.guardian.co.uk/guardian_jobs_and_money/story/0,,1360379,00.html last viewed 23.03.05

1. ^Heather Tomlinson, 'HBOS flouted dirty money rules' 16/1/04 The Guardian

http://money.guardian.co.uk/saving/banks/story/0,12410,1124473,00.html