Bank of Scotland fined £45.5m by regulator over Reading fraud

The Guardian:

The City regulator has fined Bank of Scotland £45.5m for failing to disclose information on the £245m fraud scandal at the bank’s Reading branch for two years after signs were first discovered.

The Financial Conduct Authority (FCA) said that Halifax Bank of Scotland (HBOS), which is now owned by Lloyds Banking Group, had “risked substantial prejudice to the interests of justice” by withholding information.

The fine is in relation to a scheme by managers at HBOS’s Reading branch that drained the bank and small businesses of about £245m and left hundreds of people in severe financial difficulties. The fine was reduced by almost £20m because the bank agreed to settle.

HBOS first identified suspicious behaviour in its impaired assets team – which handled struggling business – in early 2007 but failed to notify regulators fully until July 2009.