FSA in verdict has barred Cummings for holding any senior position in a UK bank, building society, investment or insurance firm.

The UK banking regulator found during the probe that between January 2006 and March 2008, Cummings failed to exercise due skill, care and diligence by pursuing an aggressive expansion strategy within the Corporate Division, without suitable controls in place to manage the associated risks.

Further, the watchdog held him responsible for failing to take care to ensure that the corporate division managed high value transactions prudently, showing signs of stress between April and December 2008.

The FSA said that Cummings was fully aware that there were significant issues with the corporate division’s controls, including weaknesses in management information, staff being incentivized to focus on revenue rather than risk, and a culture which saw risk management as a constraint on the business rather than an integral part of it.

His false optimistic approach led the firm trapped in bad debts, and its corporate division failed to monitor adequately the deterioration of high value transactions and was slow to pass them to the dedicated ‘High Risk and Impaired Assets’ team for more detailed assessment, the FSA said.

FSA, however, said that Cummings did not act deliberately or recklessly violated FSA regulations, and that the full severity of the global financial crisis, and its effects, were not reasonably foreseeable during the early part of the time period reviewed.

The FSA has judged Cummings to be personally culpable in breaching Statement of Principle 6 of the FSA’s Code of Practice for Approved Persons, by failing to exercise due skill, care and diligence in managing HBOS’s corporate division during this critical period.

FSA director of enforcement and financial crime Tracey McDermott said, "Despite being aware of the weaknesses in his division and growing problems in the economy, Cummings presided over a culture of aggressive growth without the controls in place to manage the risks associated with that strategy. Instead of reacting to the worsening environment, he raised his targets as other banks pulled out of the same markets."

"It is essential that senior executives understand that incentivising revenue over risk is a dangerous folly. Growth is a sound ambition for any business but risk must be properly managed and robust controls are imperative to ensure growth is achieved in a way that is both stable and sustainable."