Shareholders wave goodbye to Scotland's oldest bank

The resounding 84 per cent vote by Halifax Bank of Scotland (HBOS) investors will create the UK’s biggest superbank but raises the prospect of tens of thousands of job losses.

Shareholders had been widely expected to follow their Lloyds TSB counterparts, who backed the deal last month, but yesterday’s decision was greeted by a storm of protest over what could be a tidal wave of cuts and loss of high street competition.

There are also fears for the future of Scotland’s financial sector with the takeover of the Edinburgh-based financial giant, which dates back to 1695 and is the last remaining commercial institution created by the country’s original Parliament.

The new bank – called the Lloyds Banking Group – will employ 145,000 staff and have 3,000 UK branches but bosses want to slash costs by £1.5billion raising fears for up to 40,000 jobs.

Yesterday’s two-hour meeting in Birmingham National Exhibition Centre saw union leaders hand out mock ballot papers to investors. Rob MacGregor, of banking sector union Unite, said: “We are obviously concerned about redundancies. Assurances on jobs have been few and far between.”

Smaller shareholders at the meeting said they had little choice but to accept as it was revealed that financial institutions and proxy voting showed an 84 per cent backing.

One of them, Peter Hackworth, said: “I am appalled at the way the firm has been run. How any board can turn a £50billion company into a basket case in 12 months is beyond me.”

The vote which also saw shareholders back the £11.5billion Government bail-out came as HBOS shares fell more than 22 per cent and the bank saying it was operating in “increasingly difficult market conditions” with bad debts rising. Lloyds fell almost 17 per cent and Royal Bank of Scotland lost 16 per cent.

HBOS said that bad debts and losses on assets had risen to £8billion in the first 11 months this year, up from £4.8billion at the end of September.

The ancient bank remains confident in its ability to navigate through this difficult period, as part of the enlarged Lloyds Banking Group.

HBOS chairman Dennis Stevenson apologised for the bank’s plight and said its independence had not been given away easily. He told the meeting the world was living through “the most pronounced financial crisis since the Great Depression”.

A legal challenge to the Government backed takeover was rejected on Wednesday.

First Minister Alex Salmond, last night said he would have preferred HBOS to be independent but added: “What’s done is done. The Scottish Government’s job is to represent Scotland’s interests in the new merged organisation.”

Scottish Liberal Democrat leader Tavish Scott said “I am disappointed but not surprised.”