Although officially HBOS was not an acronym of any specific words, it is widely presumed to stand for Halifax Bank of Scotland.

In March 2008, HBOS shares fell 17 percent amid false rumours that it had asked the Bank of England for emergency funding.

[10] However, later that day, the BBC reported that HBOS was in advanced takeover talks with Lloyds TSB to create a "superbank" with 38 million customers.

[15] To avoid another Northern Rock-style collapse, the UK government announced that should the takeover go ahead, it would be allowed to bypass competition law.

Alex Salmond, Scotland's First Minister, previously an economist, said of the takeover: "I am very angry that we can have a situation where a bank can be forced into a merger by basically a bunch of short-selling spivs and speculators in the financial markets.

[19] The Lloyds TSB board stated that merchant banks Merrill Lynch and Morgan Stanley were among the advisers recommending the takeover.

[5] Lloyds Banking Group said Edinburgh-based HBOS, which it had absorbed in January, made a pre-tax loss of £10.8 billion in 2008.

Andy Hornby, the former chief executive of HBOS, and Lord Stevenson of Coddenham, its former chairman, appeared before the Commons Treasury Committee to answer questions about the near-collapse of the bank.

[20][21] The Chancellor of the Exchequer, Alistair Darling, claimed that the British public would benefit from the rescue plan, because the government would have some control over RBS in exchange for about £20 billion of funding.

[25] Causes of failure were identified as follows: After putting the investigation on hold in 2013, in April 2017, the Financial Conduct Authority resumed its probe of "the way HBOS handled fraud allegations at its Reading branch".

[26] On 21 June 2019, the Financial Conduct Authority fined the Bank of Scotland £45.5 million over its failure to report suspicions of fraud at its Reading branch which led to the jailing of six people.

The charity wrote that HBOS held shares in the UK arms sector totalling £483.4 million, and served as principal banker for Babcock International and Chemring.

Customers were allegedly inappropriately pressured to take on excessive debt burdens and to make acquisitions benefiting Quayside.

On 30 January 2017, following a four-month trial, former HBOS employees Scourfield and Mark Dobson were convicted of corruption and fraud involving a scheme that cost the bank £245 million;[36] Scourfield pleaded guilty to six counts including corruption, and Dobson was found guilty of counts including bribery, fraud and money laundering.

[38] Following the convictions, the BBC reported:"Businessmen Bancroft and Mills arranged sex parties, exotic foreign holidays, cash in brown envelopes and other favours for Scourfield between 2003 and 2007.

In exchange for the bribes, Scourfield would require the bank's small business customers to use Quayside Corporate Services, the firm of consultants run by Mills and his wife Alison.

In April 2017 Lloyds Banking Group (LBG) commissioned Professor Russell Griggs to oversee a compensation scheme for the victims of HBOS Reading.

The scheme concluded all of the victims businesses would have failed despite the Reading fraud and therefore only awarded compensation for D&I (Distress and inconvenience) and nothing for D&C (Direct and consequential loss).

[46] Laidlaw QC concluded the Griggs Review was “procedurally defective” and it referenced “LBG’s failure to adjust the scope of the Review following the public release of the Project Lord Turnbull Report[47] is another important defect.” The Project Lord Turnbull Report [47] was written by accountant Sally Masterton.

The report makes several serious allegations about HBOS and Lloyds management, the most important of which are that the Reading Fraud was deliberately concealed, and that the FSA was intentionally misled.

In section eight the report states, “KPMG have not only just been negligent but their direct involvement in a number of material malpractices and violations regarding HBOS is fundamental and exposes them to claims in relation to misconduct, serious dereliction of duty and breach of regulatory and statutory duties.” In 2013 Sally Masterton, a forensic accountant, provided information that was crucial to the police investigation into the Reading Fraud.

Subsequently, Ms Masterton left the bank and brought a case for unfair constructive dismissal, which was settled in 2015.

[48] In December 2018 Kevin Hollinrake MP, Co-chairman of the APPG on Fair Business Banking tabled a debate in Parliament on HBOS Reading and the Economic Secretary to the Treasury, John Glen MP, confirmed LBG would now fund an ‘Assurance’ review about the Griggs review, requested by the FCA.

[50] This resulted in questions from the FCA including: “We will also require LBG senior management to explain how and why the failings identified by Sir Ross occurred in the first place.”[51] Between December 2019 and February / March 2020, Antonio Horta-Osorio, the CEO of LBG, met with many of the Reading victims promising he would now oversee the compensation process personally.

In December 2020, the APPG on Fair Business Banking submitted a formal complaint under the SM&CR to the FCA about the conduct of LBG in relation to their treatment of HBOS Reading victims including the Bank's refusal to support victims or to compensate them for the additional three-year delay caused by the failed Griggs Review.