Shareholders rap HBOS directors for 'fine mess'

They criticised the board for lacking banking expertise and the sector as a whole for failing to foresee the credit crunch at yesterday’s general meeting in Edin­burgh to approve the deal.

However, many of the Halifax-owner’s 2.1million private investors realised they had little choice but to back the cash call, with 98.8 per cent of votes cast supporting it.

One investor cited Laurel and Hardy, telling the board: “This is another fine mess you’ve got us into.”

He said: “I wonder what you and your board were doing last year when all the words were coming out of America saying all the markets were in turmoil.”

Another, Fergus Duncan, said the rights issue was a direct result of “a lack of banking expertise ... on the board”, while investor Ian Rice asked: “Do we need more bankers on the board?” Chairman Lord Stevenson rejected the suggestion. Other investors expressed their bitterness at the banking industry as a whole. One, Barry Gorman, said it had failed to see the turmoil coming. “You must think we’re stupid,” he said.

HBOS’s small investors own 27 per cent of the company, sparking fears the bank will struggle to get the rights issue away. Small investors are usually more reluctant to take up rights than big institutions and they have been squeezed by soaring costs. However, the bank’s under­writers, Mor­gan Stan­ley and Dresdner Kleinwort, will take up any unsold shares.

Its shares fell 16p to 276p yesterday, just 1p above the rights price of 275p.

HBOS, Britain’s biggest mortgage lender, warned house prices could fall up to 9 per cent this year, hitting assets held by the bank. Stevenson said the cash call was about “old-fashioned prudence” and was “fundamentally the right thing”.

He added: “This is, by any standards, one of the more important moments in the history of the company.”

Trading in the rights starts today and investors have three weeks to decide if they want to take them up.