Page last updated at 12:31 GMT, Wednesday, 2 December 2009

HBOS 'was finished' before takeover, says Lloyds boss

Archie Kane was questioned by MSPs: From Democracy Live

Halifax Bank of Scotland was "finished as an entity" when it was taken over, a senior Lloyds boss has said.

Lloyds Banking Group executive director Archie Kane told MSPs his company had examined HBOS closely before it took over the bank.

Lloyds paid £12bn for Edinburgh-based HBOS last year, as the global financial crisis took hold.

Mr Kane's comments came as he was being questioned by the Scottish Parliament's economy committee.

He also told the Holyrood inquiry into the banking crisis that Lloyds had received about £17bn from the Treasury and was now 43% owned by the taxpayer following a UK government bailout.

'Rapid decline'

Mr Kane told the committee that Lloyds Banking Group had done everything legally possible to assess HBOS before it merged with the company.

"We did a huge amount of due diligence before we acquired HBOS, in fact everything that we could legally do," he said.

"We were aware clearly of the problems, particularly in the commercial and corporate lending markets.

"The thing we did not predict, and in fact very few people did predict, was the steep and rapid decline in the economy in [quarter] four of last year and into this year."

Mr Kane added: "I think it's quite clear now that HBOS could not have survived on its own. HBOS was finished as an entity."

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