The man who has lost HBOS all of £7 billion, Peter Cummings, a short, squat and curmudgeonly Scot, grew up in Dumbarton, a grim industrial town on the outskirts of Glasgow.

He started out at Bank of Scotland's Dumbarton branch, aged 16, making the tea and sweeping the office floor.

However, he quickly rose through the ranks, and by 2005 Mr Cummings was the highest paid director at what was now HBOS, earning even more than the chief executive, Sir James Crosby, who resigned as deputy head of the Financial Services Authority this week after a row about his management of the bank.

Mr Cummings, who was head of HBOS's corporate lending business, rubbed shoulders with some of Britain's most colourful businessmen. His star investors included the philanthropist and retail magnate Sir Tom Hunter, Sir Philip Green, the owner of Top Shop, and the property entrepreneur Robert Tchenguiz.

For many years Mr Cummings's singular investment strategy, which relied heavily on his personal relationship with entrepreneurs, earned the bank billions.

However, Mr Cummings, 53, who was known for hard drinking and for doing business on no more than a handshake, took a huge, and hugely risky punt on the property market.

For years he prided himself on lending to home builders and property investors regardless of economic conditions. In 2007 and 2008, while more cautious bankers reined in lending, Mr Cumming's door was always open to his friends. Last year he declared: “Some people look as though they are losing their nerve, beginning to panic even, in today's testing real estate environment. Not us.”

At that time, he still surrounded himself with high-profile businessesmen. He was also throwing money at the Icelandic property investment company Baugur, headed by the charismatic Jon Asgeir Johannesson, which owned swaths of the British high street, including Iceland Food Group, part of House of Fraser and chains such as Whistles and Goldsmiths.

Mr Cummings, though ostensibly media-shy, was available on his mobile phone to favoured journalists, and was largely fêted by the press. However, by the spring of last year, the wheels were coming off the wagon. Of the £109 billion loanbook managed by Mr Cummings, £40 billion went to construction and property companies whose values were in freefall.

The banks have now taken the keys to big property investments he bankrolled, including the retirement home builder McCarthy & Stone, which Mr Cummings bought with Sir Tom Hunter and the Reuben brothers, two more property developers. Baugur is close to bankrupty.

In his only statement on the collapse of HBOS to date, Mr Cummings said in November: “At the time we did our housebuilding deals, there was no evidence of an oversupply of housing and no evidence of house price inflation going anywhere but up.

“Did we factor in a downturn in the housing market? Of course we did. But did we factor in that the wholesale-money markets would be closed for 14 months and mortgage supply would dry up? No, we didn't and neither did any other bank.”

To some in Scotland he remains a hero. In 2006, he backed a $300 million management buy-out from the American oil giant Halliburton of its Aberdeen operations. The business, now known as PSN, is Scotland's fastest-growing private company and Bob Keiller, its chief executive, said: “The support we got from Peter Cummings and his team was absolutely vital.”

Sir Tom Hunter also came to Mr Cummings's defence last night, saying that his record at the bank needed to be seen in totality. He said: “Every decision he took was done with the bank's best interests at heart. He is a hard-working, dedicated guy and a tough but fair man to deal with.”

Mr Cummings, who is believed to have accepted a £660,000 pay-off earlier this year when his services were no longer required by HBOS's new owner, Lloyds Banking Group, is now nowhere to be found, however.

Some say he is holed up north of the Border, while others talk of a £4 million luxury villa, possible in Marbella on the Costa del Sol, Spain. Or perhaps Mr Cummings is using his time off to indulge in his favourite hobby: wreck diving in the North Sea.

Wherever he is, with one in 15 of HBOS's corporate investments now considered toxic, he is unlikely to be on the 2009 Christmas card list of Eric Daniels, Lloyds' chief executive.

In trouble

Key HBOS investments suffering difficulties

McCarthy & Stone (housebuilders) - close to collapse

Crest Nicholson (housebuilders) - banks forced to take control

Baugur (retail) - partly in administration

Wyevale Gardens (retail) - written down by £370 million

Big names backed by Cummings

Sir Tom Hunter retail

Sir Philip Green retail

Robert Tchenguiz property

Vincent Tchenguiz property

Nick Leslau property

Trevor Hemmings gaming

Jón Ásgeir Jóhannesson retail

Reuben brothers property

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