LONDON—British regulators on Thursday heaped more criticism on the former bosses of HBOS PLC, the failed bank that cost the U.K. government £ 20.5 billion ($31.2 billion) to bail out and merge into Lloyds Banking Group PLC at the height of the financial crisis seven years ago.

In a long-delayed report on one of the most bruising episodes in Britain's financial history, the Prudential Regulation Authority and Financial Conduct Authority said HBOS's lending splurge to risky companies and property developers led to disaster when the loan book soured and funding markets froze up in the summer of 2008. Ultimate responsibility for the failure rests with the bank's board and senior management, they said.

They named James Crosby, chief executive of HBOS from 2001 until 2006; Andy Hornby, its last chief executive; and Dennis Stevenson, chairman of HBOS until 2008, as among the people directly accountable for the ill-conceived expansion effort in the lead-up to the bailout, but stopped short of taking any fresh enforcement action.

In 2012, regulators fined the head of HBOS's corporate division, Peter Cummings, £ 500,000 and banned him from working in financial services. Mr. Cummings said in a statement at the time that he rejected the FSA's decision in its entirety but wouldn't appeal because of costs and the strain the process would place on him and his family.

Mr. Crosby, who had received a knighthood in 2006 for services to the financial industry, relinquished the honor in 2013 and made a public apology for what had happened at HBOS. Mr. Hornby and Mr. Stevenson couldn't immediately be reached.

The report Thursday comes as agencies in the U.S. work on a likely final wave of criminal cases related to events in the financial crisis. In one example reported this week by The Wall Street Journal, Federal prosecutors are actively pursuing criminal cases against executives from Royal Bank of Scotland Group PLC and J.P. Morgan Chase & Co. for allegedly selling flawed mortgage securities, according to people familiar with those probes. Since the crisis, big banks in the U.S. and in Britain have paid billions of dollars in settlements related to precrisis era activities, but the lack of individual fines or convictions has sparked political controversy on both sides of the Atlantic.

In April 2013, a parliamentary commission made similar findings to Thursday's HBOS report and said regulators should consider banning Mr. Crosby, Mr. Stevenson and Mr. Hornby from working in the financial sector. As part of Thursday's review, a lawyer, Andrew Green, was commissioned to review regulators' action in the matter.

Mr. Green said the PRA and FCA should consider banning a range of HBOS former executives, including but not limited to Mr. Hornby and Mr. Stevenson.

"There is plainly a public interest in this being considered afresh," Mr. Green said. The regulators said they are reviewing the recommendation.

Thursday's report ran to more than 400 pages and was delayed for years by protracted legal wrangling, underscoring the U.K.'s tortured effort to come to terms with the fallout from the financial crisis.

HBOS was formed in 2001 when Halifax Building Society merged with The Bank of Scotland. Mr. Cummings remains the only manager of a failed bank to have been fined for not exercising due skill and care.

Write to Margot Patrick at margot.patrick@wsj.com and Max Colchester at max.colchester@wsj.com

 

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(END) Dow Jones Newswires

November 19, 2015 08:55 ET (13:55 GMT)

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