Jeremy Warner: Lloyds only has itself to blame for HBOS misery

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Outlook: Is the mess Lloyds TSB has got itself into by acquiring HBOS down to the Prime Minister? It suits the Opposition's agenda to argue as such, but it is a long way from the truth. The reality is that both Sir Victor Blank, the Lloyds TSB chairman, and his chief executive, Eric Daniels, were hot to trot.

The Government was equally keen to find a "solution" to the troubled HBOS which didn't require nationalisation, and was therefore prepared to lift competition rules to allow the merger to take place. At the time, Sir Victor couldn't believe his luck. It was to prove a short-lived triumph, but it is disingenuous to suggest it was all Gordon Brown's fault.

Sir Victor is a big boy (literally as well as figuratively) and a former investment banker to boot. He would be the first to admit it was entirely his risk. If he had thought it would endanger the future of Lloyds, there is no way be would have done it, however great the pressure from the Prime Minister. Many Lloyds TSB shareholders are understandably furious about what's happened. But they blame the HBOS board as much as anyone. Failure to recognise or disclose quite how serious the bad-debt problem had become looks to some like an omission verging on outright concealment.

Yet there is not a whole lot they can do about it now. For better or worse they are stuck with HBOS. Any legal action against HBOS directors could only be a token gesture. Nor at this stage does there appear to be any great appetite for Mr Daniels' head on a platter. Competent bankers are these days hard to come by.

On the other hand, Mr Daniels plainly needs to change his style if he is to survive for the long haul. He completely misjudged the public mood when he last week told MPs on the Treasury Select Committee that his £1m in pay was a modest salary. Nor can you go around giving the impression that underestimating HBOS's bad-debt experience by a whopping £1.6bn is no more serious than losing a ten-bob note – not that bad, and the sort of thing shareholders must expect to happen from time to time.

It smacks of arrogance, or worse, lack of awareness and complacency. Let's hope he's "kitchen-sinked" it with last week's update. Anything more, and investors would begin seriously to question his competence.