Final nail in the coffin after 313 proud years

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ITS history was also its asset, and "tanto uberior" its guiding motto for more than three centuries. In the end, though, the markets paid no heed to heritage. Never have those words, "So much the more plentiful", rang so hollow.

In the anonymity of exhibition hall 12 at the National Exhibition Centre in Birmingham, the erosion of a bedrock of Scottish civil life was confirmed yesterday.

At 12:40pm, a purple and yellow sign flashed up for five seconds. Overwhelmingly, HBOS shareholders had approved the bank's takeover by Lloyds TSB and an 11.5 billion funding injection from the taxpayer.

Only about 300 shareholders were in the cavernous auditorium, many others having cast their votes by post. Yet, until the very end, the voices of acrimony had their say. Familiar accusations of recklessness and greed were met with humbled pragmatism.

There was neither pride nor happiness about the proceedings, replied Lord Stevenson, the bank's chairman, emphasising the paucity of choice open to his board. "We do not cede our independence lightly," he said.

BUT cede it they have. Only a generation after the celebration of its 300th anniversary, the identity of the Bank of Scotland has been vanquished.

It was an institution designed to protect Scotland's power, but so great was its influence every institutional upturn or failing became a means by which to gauge the health of the country itself. Now it is no more.

Lord Stevenson's address was tinged with regret. A slim, erudite figure, he seemed nervous onstage, pacing around and frequently fishing mints from a container in his pocket.

In front of 14 board members, including Andy Hornby, the chief executive, he told an audience gathered for one "overwhelming and devastating reason" that the present financial crisis was the deepest since the Great Depression.

The decision was "not one taken lightly" – but still he felt the need to offer an apology. "I very much regret this," he said.

Others also chose to strike a similar tone. "I would like to say sorry for the anxiety that our shareholders have felt," Mr Hornby said. Sir Ron Garrick, who heads the bank's independent directors, proved equally resigned.

It heralded a sad end for an institution that began at the tail end of the 17th century, when a cabal of politicians, merchants and lawyers agreed upon the need for a banking system that would offer long-term credit and security to Scotland.

Scotland's first bank was envisaged as an ideal facilitator for trade with England and the Low Countries and, most important, a means of ensuring self-preservation for the landed classes.

An act of the old Scottish parliament gave birth to the institution on 17 July, 1695, and seven months later regal subscription books, bound in red leather, were opened in Edinburgh and London. In time, the 172 original shareholders emerged and gathered together a working capital of some 100,000 sterling. The lion's share came from the nobility and lairds.

They were optimistic and secure in the knowledge that, whatever might visit them, the Bank of Scotland would weather the storm. It did just that, enduring through the Jacobite rebellion, two world wars, revolutions across Europe and the collapse of several banks during the 1800s.

Come the modern age, it hit its stride. By the 1950s, it was leading a wave of consolidation as the post-war economy revived, and later led the way in funding the North Sea oil boom.

JUST as it seemed the golden years would never end, the slow decline began. Fears were first aired over the bank's identity when it became the bride of the Halifax group. In the past year, its health worsened considerably.

As financial catastrophe spread from the US, HBOS was caught short.

As Britain's biggest mortgage lender, and with a corporate loan book vulnerable to the faltering fortunes of the property and construction sectors, it suffered like never before.

Its share price plummeted, and only this week the group revealed that bad loans and other losses this year had jumped by two-thirds in just two months to 8 billion.

Such a catalogue of calamities was not tolerated by angry shareholders yesterday.

Soon after Lord Stevenson and Mr Hornby had had their say, the shareholders took their chance to seek answers. One, Peter Hapworth, told Lord Stevenson: "I can't believe you, as chairman, and the directors did not know what was going on."

Kishin Navani, a retired accountant, was more scathing. "Your board has been reckless," he shouted, adding that he had contacted the Financial Services Authority in the summer to warn it about short selling, but found the bank's board unwilling to take his views on board.

"Had they taken my advice on 24 July, we probably would have survived," he seethed. "This was common sense. The problem was that common sense was not common."

LORD Stevenson, adopting a grave tone, said: "If the merger does not go ahead, there is absolutely no certainty or clarity where liquidity will come from for this bank."

He added that he could not make his own views about short selling known, but "it is not completely bad, nor is it completely good".

Peter Smith, another shareholder, asked why the meeting had not taken place in Scotland. "Is this the right place to decide Scotland's future?" he asked, demanding a second meeting north of the Border.

The chairman pointed out that Scots comprised only 15 per cent of the shareholders, and that the HBOS board had made it a habit of holding its meetings around the country.

It was the final question f that dumbfounded Lord Stevenson. Would Lloyds Banking Group continue to be run like a family business, one shareholder asked.

The HBOS chairman reeled. "Gosh, that is a heart-wrenching question," he admitted. And one he could not answer.

Brown, Darling, Mandelson – the accusations fly

THE battle for HBOS has ended but questions on whether enough was done to save the bank have only just begun.

The finger will be pointed at Gordon Brown, the Prime Minister, and Alistair Darling, the Chancellor, not just for allowing the deal to go through by waiving competition rules, but also for apparently refusing to consider any alternative.

The key moment came six weeks after the deal was given the green light, when it emerged that not only HBOS needed bailing out, but also Lloyds and RBS, with other banks in trouble too. At that point a stand-alone option seemed to be back on the table.

Both Mr Brown and Mr Darling have argued that there was no alternative to the Lloyds bid and that was the only option which would provide financial stability.

Lord Mandelson, the Business Secretary, has not escaped criticism either. A few days after taking office, he made the crucial decision not to refer the takeover to the Competition Commission, leading to an unsuccessful challenge to the Competition Appeals Tribunal

However, blame will not solely be attached to UK Labour ministers. HBOS's board, chaired by Lord Stevenson, and its chief executive Andy Hornbywill be remembered as the people who brought a 300-year institution to its knees.

They argue that world events brought HBOS to this sorry end and that the Lloyds takeover was the only option, but their poor business practices, disastrous loans and refusal to look at alternatives for the bank were the real cause in many people's eyes. Questions have also been asked about the First Minister, Alex Salmond. At the start of the crisis he made great play of fighting Scotland's corner. But at the crucial moment, when it became clear that not only HBOS needed bailing out, he was reluctant to call for the deal to be abandoned. Only later did he complain of the failure of the government to "provide a level playing field" and express his preference for a stand-alone option.

Scottish Labour's Holyrood leader, Iain Gray, who had promised to be his own man in the leadership contest over the summer, toed the Westminster line on the issue on the few occasions he spoke out.