HBOS merger was like two tankers colliding

Evidence: Llloyds chairman Sir Victor Blank

Lloyds chairman Sir Victor Blank warned the Prime Minister that toxic bank HBOS might be unable to open its doors as the financial crisis raged, a court heard.

Blank rang Gordon Brown to warn him of the danger after Lloyds decided to buy HBOS in a 2008 mega-deal.

The former chairman said that days after the deal was unveiled, the crisis took a turn for the worse.

He was told by a Lloyds executive that HBOS was unable to access emergency support from the Bank of England, meaning branches could be forced to stay shut on September 29, 2008.

Giving evidence in a lawsuit brought by Lloyds investors who lost their life savings when the share price crashed after the merger, the former chairman recalled hearing about the perilous situation.

He said: ‘I walked round the garden three times thinking what the heck can I do. It was like two ocean liners about to collide.’

Blank, 75, an Oxford-educated former investment banker, phoned Brown that afternoon to warn that ‘it looked like a catastrophe was coming’.

He added that a bank nationalisation at that moment could have brought the entire financial system crashing down.