When you put your trust and more importantly your money in the hands of a fruit & veg man can you be sure it will be safe?

‘…We're saying that our deposit growth is going to be strong and as you have seen from all of our underling trends in the second half of this year, our wholesale funding basis has been amazingly resilient. So we are extremely confident with the outlook…’ Andy Hornby

It may not be common knowledge, although the information is there for everyone to seek out, that Andy Hornby, HBOS Group CEO was once working for Asda as head of retail. At the age of 32 he became HBOS’s retail guru and then the CEO within a short space of time.

In this dangerous game of financial services where the regulators fail, banks fail around the world, can we the depositors be sure that our money is in the right hands? I for one now doubt it. I think also that there are a lot of senior bank analysts that also doubt it too!

Last week we saw HBOS shares take a momentary 18% dive wiping out billions of pounds of investor value. They have since recovered that position but still remain very close to half their value 12 months ago.

Bank analysts are not fools, but they are gentlemen and women. They reserve their doubts for the board report. They have to be seen to be doing due diligence on behalf of their own investors, pension funds, etc.

Myself, well I’m not such a gentleman. I have been reading the transcript from the analyst’s day this last reporting season. There are enough doubts cast on the CEO and his management team to make me wonder if the CEO should again be counting carrots rather than our money. At least with carrots he has only the odd bunny or two to harm.

The transcript shows that HBOS are seriously misguided in their assertion that everything in the garden is rosy. It clearly is not and that may have been the trigger for last week’s share shock. They also recently announced the raising of capital through the yen.

It is reported that they have a 60% exposure to sub-prime or Alt-A but analysts were indicating this could be as much as 77%. Hornby would not comment on this at the analysts briefing. In fact Hornby hardly commented on anything except to say how amazingly transparent he and they have been. Transparent? The jury must out on that one around the city.

Within the bank changes have taken place over the last few months running up to the credit crunch. The Asset Management arm was merged with Treasury under one head. That head retired and after a long time away ‘retired’ Mike Ellis came back as head of Group Finance. All is not well in this our largest mortgage bank.

Dig your Asda overalls out Mr Hornby, you may be needing them quite soon!

HD

Transcript: http://www.insurancenewsnet.com/article.asp?n=1&neID=20080227560.2_b29616278773132c