Bank of Scotland 'guilty of very serious misconduct'

Bank of Scotland was guilty of “very serious misconduct” which contributed to the taxpayer bailout of its parent company HBOS, the UK City watchdog said today.

The Financial Services Authority (FSA) in Britain said the corporate division took too many risks from the start of 2006, leaving it vulnerable to the financial downturn.

The FSA criticised the “aggressive deal structures” increasingly pursued by the bank and said it failed to reduce its risky behaviour despite expectations of a downturn in the markets.

Although this behaviour contributed to the British taxpayer bailout of HBOS – and the eventual bailout of Lloyds, which bought HBOS – there will be no punishment as the FSA seeks to protect taxpayers’ money.