Robert Peston interviews Andy Hornby of HBOS

October 5, 2008

Andrew Hornby, head of HBOS, is notoriously discrete. In a rare interview with Robert Peston after the tsunani week of mid September 2008, he predicts an 18-month long haul in financial markets, and house price deflation, and identifying shortage of credit as the primary causal factor of the credit crunch

The interview took place in advance of the Tsunami week in the world’s finance markets, and makes no mention of the dramatic events that were about to befall HBOS and its leader. It retains merit because it permits a ‘before and after’ analysis

Pressed on the bank’s treatment of customers, Mr Hornby identified a triple whammy for consumers of food prices, fuel costs and utility bills, resulting in less discretionary income to save. The key to an unblocking of illiquidity will be the US housing market, where a return to health will then accelerate global confidence.

Hornby disagreed that HBOS had irresponsibly managed leading over the last few years, but defended its current cautionary stance and restricted lending.

Peston: Not a single senior banker has resigned or been fired [That can’t be right unless Peston is referring to HBOS rather than bankers in general].
Hornby: We are taking responsibility, which is different from being fired.

Peston: Morgan Stanley at the end sold short.
Hornby: No comment, [but pointed to how quickly the markets cleared.]

RP outlines AH’s his glittering career What had been learned? Planning for (and dealing with) uncertainties. Later in the interview AH returned to the inter-connectedness of global factors, and need to keep a five year planning perspective [by which time the long-term trends in housing and finance will have been restored.

Peston: Are you profiteering in current circumstances? [By increased charges to customers]
Hornby: No, we in UK are competitive internationally.

The interview format remains a one-dimensional glimpses of leaders and their competencies Overall, a competent but unremarkable rather low-key performance. Strengths. Reminded me in assuredness and confidence of an interview by Louis Gallois of EADS. A leader able to reassure and communicate trust in his competence. The style seemed particularly appropriate for the current circumstances.

Within a week he was defending the proposed takeover of HBOS by Lloyds TSB