2 Penalized After British Bank Bailout
2 Penalized After British Bank Bailout
By THE ASSOCIATED PRESS - New York Times, 4/13/2010
LONDON (AP) — The British financial regulator has fined two former executives of the mortgage lender Northern Rock — the country’s first major casualty of the global credit crisis — for misreporting figures on loan arrears.
The Financial Services Authority said Tuesday that it wanted its sanctions against the lender’s former deputy chief executive, David Baker, and the former managing credit director, Richard Barclay, to be a “loud and clear message that we are serious about taking action against senior directors where they step over the line.”
The men are the only senior executives of a British banking institution to be penalized for misconduct in the wake of the government’s multibillion-pound bailout in 2008.
The regulator fined Mr. Baker £504,000 ($770,000) and barred him from any activity in the banking sector. Mr. Barclay was fined £140,000 and prohibited from holding any senior post in the industry.
Northern Rock, once the country’s fifth-biggest lender, was nationalized by the government in February 2008 after suffering the first run on a British bank in more than a century when its funding problems became public in September 2007.
The regulator said that Mr. Baker, who held his position at the bank from 2004 to 2008, knew that almost 2,000 loans had been omitted from the mortgage arrears figures in January 2007 but failed to point that out, instead taking steps to ensure they were not reported.
Mr. Baker also misled stakeholders and analysts about the bank’s impaired loan book, quoting inaccurate figures. If he had provided the correct figures, arrears would have jumped by 50 percent, the regulator said.
Mr. Barclay, who led the bank’s debt management unit until March this year, failed to ensure that the information it reported was accurate despite warning signs at an early stage, the regulator said.