But the world changed, when in the middle of October 2008, the government required all the banks to have extra capital.
"The government changed the rules and the world changed," said Sir Victor.
"What we found in the HBOS portfolio was I think the problems we anticipated being there. The speed with which those problems came home to roost was greater than we would have anticipated because [of] the fall in GDP, " he said.
He added that the economic slide was "way beyond the expectations of the chancellor of the exchequer or Warren Buffett or you or me".
Changes at top
Sir Victor announced in May that he would step aside as chairman, a decision he accepts as necessary.
"It became clear that in order to rehabilitate Lloyds Banking Group as quickly as possible in the eyes of the banking community, it was probably necessary for some change to be made at the top. Fair or unfair... it was necessary."
Banks, such as HBOS, which looked to the wholesale markets to raise money, thought these funds would never dry up, he added.
"If there's a lesson to be learnt out of this crisis, it is that you've got to have liquidity in the system and you've got to make sure that you've got that liquidity," he said.
The full interview with Sir Victor Blank can be seen on Leading Questions with Robert Peston at 2230 BST on the BBC News Channel or watch it now by clicking here
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