UPDATE 3-UK lawmakers call for ban on former bosses for HBOS failure

* Scathing report criticises trio of former HBOS executives

* Regulator should mull barring execs from banking-lawmakers

* HBOS would have hit trouble without 2008 market crisis

* Regulator was also "thoroughly inadequate"

* Ex CEO Crosby resigns from Bridgepoint

By Matt Scuffham

LONDON, April 5 (Reuters) - Bailed-out British lender HBOSwas so badly run it would have failed even without the 2008financial crisis and the regulator should consider banning itsformer bosses from the industry, UK lawmakers said in a damningreport.

The Parliamentary Commission on Banking Standards, taskedwith finding ways to reform UK banks, said HBOS was an "accidentwaiting to happen", with bad lending and losses across thebusiness likely to have led to its insolvency even without thefunding and liquidity problems of the financial crisis.

The committee said regulators bore some of the blame, butprimary responsibility lay with Dennis Stevenson, chairman fromthe formation of HBOS in 2001 until its collapse, and formerchief executives James Crosby and Andy Hornby.

There was a "colossal failure of senior management and theboard", said Commission chairman Andrew Tyrie, a Conservativelawmaker who expressed surprise that only Peter Cummings, whowas head of corporate lending at HBOS, had so far been punished.

"The Commission has asked the regulator to consider whetherthese individuals should be barred from undertaking any futurerole in the sector," Tyrie said in the report published onFriday.

Crosby was chief executive of HBOS between 2001 and 2006before being succeeded by Hornby.

The trio earned millions during their time at the bank andin subsequent roles. Crosby was paid close to 8 million poundsduring his tenure as HBOS's chief executive. Hornby was earning1.9 million pounds a year before leaving the bank, whileStevenson's package was worth over 800,000 pounds a year.

Following the report, Crosby, 57, promptly resigned as anadvisor to private equity firm Bridgepoint. He is also seniorindependent director at the world's biggest catering company,Compass, which declined to comment on whether he wouldkeep his 125,000-pound-a-year position.

Cummings was fined 500,000 pounds ($759,000) by Britain'sfinancial services regulator in September and banned for lifefrom the industry.

HBOS, Britain's biggest mortgage lender, had to be rescuedwith a government-engineered takeover by rival Lloyds,which subsequently needed a 20-billion-pound bailout to survive.

Hornby, who since leaving HBOS, has worked as chiefexecutive of healthcare group Alliance Boots, earning over 2million pounds a year, and who currently runs betting shop chainCoral, declined to comment on the report.

Coral, however, had nothing but praise for Hornby, 46, and aspokesman said his position was safe.

"Coral is performing extremely well, and we are reallypleased with the great job Andy is doing."

Stevenson, 67, who sits in the upper chamber of parliament,could not be reached for comment.

HBOS was created in 2001 by a merger between Halifax, aformer mutually owned savings and loans firm, and the300-year-old Bank of Scotland. It ramped up lending using cheapfunding on the wholesale markets rather than safer customerdeposits, and its high-risk strategy was exposed when thatfunding dried up following the collapse of U.S. investment bankLehman Brothers in 2008.

HBOS's managers blamed the financial crisis for thecollapse, but the Commission said the bank's business model wasinherently flawed and its board was a "model of self-delusion".

"The sums would never have added up," Tyrie said.

"The Commission has estimated that, taken together, thelosses incurred by the corporate, international and treasurydivisions would have led to insolvency, regardless of fundingand liquidity problems, had HBOS not been bailed out by bothLloyds and the taxpayer," he said.

The Commission said 25 billion pounds was lost on badcorporate loans, and there were losses of 15 billion at itsinternational business and 7 billion at its treasury unit.

The report said the role played by Britain's financialregulator had been "thoroughly inadequate".

Britain's Finance Ministry said the failure of HBOS was a"symptom of the financial crisis and the regulatory system inplace at that time". It said the introduction of a tighterregulatory regime would help prevent future failures.

The responsibilities of the FSA have been passed to two newbodies, the Financial Conduct Authority and the PrudentialRegulation Authority.