HBOS accused of high risk loans
High risk loans to a handful of businesses from HBOS led to losses of £250 million at the bank, according to a BBC investigation.
Radio 4 programme File on 4 claims to have uncovered several firms who say the bank required them to employ consultants Quayside Corporate Services as a condition for getting a loan.
Quayside's job was to turn these companies around, but allegedly in some cases this involved borrowing more cash from HBOS, sinking the firms further into debt.
MPs have taken up some of the cases involved and Liberal Democrat shadow Treasury secretary Vince Cable has called on the Financial Services Authority (FSA) to investigate evidence of "very, very serious allegations".
The corporate lending unit, based in Reading, is thought to have loaned out £250 million between 2002 and 2007 to struggling companies.
In a statement, Bank of Scotland said it "acted throughout in a fair and responsible way."
"It is a completely normal approach for banks to use consultants when working with corporate customers who are facing financial difficulties," the bank added.
"Consultants are only brought in when a company's management and owners have been unable to turn the business around themselves. We take great care to ensure that any consultants we work with offer value-for-money service and relevant experience."
HBOS made a pre-tax loss of £10.8 billion in 2008, Lloyds Banking Group said in February, after taking over the lender.
The bank is majority-owned by the government after ministers injected £17 billion into the rescue.
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