HBOS: The questions that must be answered

1 How did Scotland lose its oldest banking institution and why was more not done to prevent it happening?

The Bank of Scotland has been around since 1695, but now its whole future and identity is in doubt. Two previous episodes of "short selling" – essentially, making money by deliberately forcing down a company's share price – had brought stocks to their knees and smashed the bank's rights issue, yet the crisis was not tackled. HBOS also had high exposure to mortgage markets and, amid fears of falling house prices, there was a loss of confidence.

WHO NEEDS TO ANSWER: The government, the FSA and the financial markets.

2 Why was action not taken earlier to prevent short sellers hijacking a sound financial institution?

Fears about short selling (selling without owning the shares) have been around for some time, and Gordon Brown yesterday said he had had concerns about "irresponsible behaviour" and the need for reform for a while, but it was only last night that the Financial Services Authority finally acted to outlaw it in the UK – too little, too late for HBOS. Short selling involves a concerted effort to force down the share price of a company.

WHO NEEDS TO ANSWER: The Financial Services Authority, the Treasury and the Bank of England.

3 Why has the FSA been so ineffectual as the crisis unfolded?

On Wednesday morning, the FSA said HBOS was still "a well-capitalised bank that continues to fund its business in a satisfactory way" – but Alistair Darling said yesterday that without the merger the outlook was "very bleak indeed… We were on to their (HBOS's) problem for several weeks. It didn't just suddenly happen…" Questions are now being asked about whether the FSA needs a major overhaul to stop this happening again.

WHO NEEDS TO ANSWER: The Treasury, FSA and HBOS.

4 When did the talks begin to put together the Lloyds TSB takeover – and were any alternatives on the table?

There are differing explanations of when things started – six weeks or just a few days ago? The versions of the Lloyds TSB bosses and the Prime Minister appeared initially to differ. It is unclear if there was any attempt to find other interested parties – but, if so, were they put off by the Lloyds TSB deal being presented effectively as a fait accompli?

WHO NEEDS TO ANSWER: Lloyds TSB, HBOS and Gordon Brown and his government.

5 Why can't the Bank of Scotland be protected as a separate legal entity with a meaningful HQ in Edinburgh?

The future shape of the new megabank is unclear but there are fears it may be called Lloyds Halifax, losing the Bank of Scotland name. It is understood the name may stay over Scottish branches, with the Halifax name staying in northern England and Lloyds elsewhere. Keeping the HQ in Edinburgh would maintain Scotland's reputation for fiscal rectitude – and significant employment.

WHO NEEDS TO ANSWER: Lloyds TSB and HBOS.

6 Will the Bank of Scotland brand and banknotes carry any meaning without top-level decision-making?

The Bank of Scotland name above a branch, on chequebooks and banknotes, and a Scottish management mean little if real decisions are made in London. If Bank of Scotland is reduced to a brass plaque as all key moves are made in London, Scotland's whole banking history is shaken. The loss of the HQ of a FTSE 100 company is a grievous blow. It is not just the treasury and management functions that Scotland would lose, but the many ancillary services that support these – the flotilla of little boats that service the grand battleships.

The new megabank looks set to see the end of the "TSB" bit of Lloyds TSB, another loss for Scotland as the TSB (once the Trustee Savings Bank) began here.

WHO NEEDS TO ANSWER: Lloyds TSB and HBOS.

7 Should HBOS chief executive Andy Hornby and chairman Sir Dennis Stevenson have had a higher profile in trying to prevent lack of confidence among investors and depositors?

There has been criticism of a real absence of leadership from Hornby and Stevenson. Even after the rights issue debacle, they kept such a low profile that they were almost subterranean. Why were they not more robust in supporting the bank? Will their inaction force thousands of customers into the arms of great rival Royal Bank of Scotland?

WHO NEEDS TO ANSWER: Hornby and Stevenson.

8 Can the new company assure Scottish business customers that its service will be as professional and speedy as under HBOS Corporate?

Under Peter Cummings, HBOS Corporate is a respected business with Scottish knowledge. If corporate business banking moves to London, will businesses be subject to more distant and slower decision-making?

WHO NEEDS TO ANSWER: Lloyds TSB chief executive Eric Daniels, Hornby, et al.

9 What is the government doing to protect and support the Scottish economy from the fallout?

Major job losses in the banks and the potential for many more in associated businesses present huge challenges. What is being done to boost business confidence and to mitigate against the impact of such major losses?

WHO NEEDS TO ANSWER: Westminster government, Alex Salmond, CBI and other business groups.

10 What is being done to reassure retail customers and mortgage-holders their investments are safe?

People are confused by the huge fallout and want reassurance about their money – and whether their local branch will remain open.

WHO NEEDS TO ANSWER: Daniels and Hornby.