The credit gloom
3 years ago
HBOS chief executive Andrew Hornby says it could be well into 2010 before the economic gloom begins to lift and UK banks feel confident enough to start lending again.
In a rare interview ,the 41 year old dubbed the "golden boy of British Banking " suggests there is little the government can do to stimulate the economy while the US housing market remains in the doldrums.
Mr.Hornby whose company owns the Halifax and Bank of Scotland ,says British lenders will continue to suffer major problems in offering mortgages until they can raise significant sums on international markets,primarily in America.
' Its going to be 18 months before US house prices have started to rise again,which is what is required for banks to have the confidence to start lending again,It will take a long time to play out, ' he told the BBS.
He added there was 'no doubt' Britain would experience house-price deflation on a scale not seen since the early Nineties.But he said unemployment,which means may people cannot pay their mortgages,would not reach the levels it did in the last house-price crash.
Chancellor Alistair Darling's warning last week that Britain faced 'arguably the worst 'economic down turn for 60 years caused a furore and is said to have soured his relationship with Gordon Brown.
Meanwhile ,the Organization for Economic Co-operation and Development has forecast that Britain's economy will fall into recession this year.
HBOS ,which owns a fifth of Britain's mortgage market,saw pre-tax profits fall 72per cent in the first six months of this year.Asked why no bank chiefs had resigned because of disastrous falls in profits,Oxford and Harvard educated Mr Hornby said they were operating in an 'incredibly tough environment'.
Mr Hornby,promoted to the top job at HBOS at 38 ,added that the main lesson he had learned from the economic downturn was to 'always look through to five years ahead'.
He said: 'International markets are also interlinked that you have to be looking outside your own market'." Daily Mail 1st Sept 08"