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British bank watchdogs investigate former HBOS officials

By Huw Jones

LONDON (Reuters) - Britain's banking regulators will investigate whether certain former senior managers at HBOS, the bank which collapsed in 2008, should be banned from holding office in the financial sector, they said on Thursday.

"These investigations will determine whether or not any prohibition proceedings should be commenced against them," the Bank of England's Prudential Regulation Authority and the Financial Conduct Authority said in a joint statement.

Only the head of HBOS's corporate lending division, Peter Cummings, has so far faced any formal sanction as a result of the bank's collapse. He was banned from working in a senior role in UK financial services and fined 500,000 pounds ($714,400).

"The FCA and PRA continue to review materials with a view to making further decisions regarding other former HBOS senior managers," the regulators added.

The watchdogs did not name any of the former managers they would be investigating, although in November they said that they would consider barring up to 10 executives linked to HBOS, after a report by an independent lawyer they should review a previous decision not to act.

Andrew Tyrie, chairman of parliament's Treasury Select Committee, said the moves had taken too long.

"Overdue doesn't capture it. It is eight years since the collapse of HBOS in 2008. It has taken a heap of pressure from parliament to secure appropriate action from the regulators," he said.

"The lion's share of the investigatory work should already have been undertaken in the preparation of the regulators' report in to the failure of the bank," Tyrie added.

Following calls from Tyrie, Britain's accounting watchdog, the Financial Reporting Council, said last week it was reviewing how KPMG audited HBOS' accounts before it crashed.

The FCA and PRA cannot impose criminal penalties as too much time has passed since the bank's collapse.

HBOS, which traded under the brands Halifax and Bank of Scotland, had to be rescued in a government-engineered 2008 takeover by rival Lloyds, which subsequently needed a 20 billion pound bailout of its own.

Britain's business ministry, which was sent a copy of the November report, has the power to disqualify former directors from serving on company boards outside the financial sector.

($1 = 0.6999 pounds)

(Reporting by Huw Jones, editing by Rachel Armstrong/Jeremy Gaunt)