Nine weeks ago a senior official at HBOS remarked that the world would have to end for the bank to cut its dividend.

Yesterday the globe was still more or less rotating but the HBOS dividend was being shredded, nevertheless. The writedowns and rights issue had been well flagged over the past few days, but the depth of the dividend cut was a shock.

In essence, the payout is going to be pruned three times over.

First, the 2008 interim payment will be made in shares: that's really no dividend at all. Second, the future dividend pot is being distributed among two fifths more shares as a result of the rights issue. Third, HBOS is earmarking a smaller proportion of future profits for the payout.

Just like Royal Bank of Scotland last week, HBOS has tried to disguise the reduction, but reduction it is, probably of well over 50 per cent this year.

HBOS's one supreme attraction - as a generous yield stock - has taken a pounding, for, over the long term, the brutal reality is that holding HBOS shares for any other reason has been a mug's game.

The shares given to Halifax Building Society members 11 years ago were then worth 700p. Today they are less than 500p. That is a terrible indictment of HBOS, though the bank is not alone in this scale of value destruction.

There was another reason for shareholder grumpiness yesterday - the paucity of information over the £2.8 billion of treasury losses.

HBOS has not given nearly enough detail for investors to make any kind of judgment about the solidity of its remaining treasury assets.

That matters: the book is valued at £82billion. The bank is relying on what it calls HBOS methodology to value these assets.

That might not be the most conservative approach. As one wag put it yesterday: “According to my wife's methodology, we spend nothing on shoes.”

HBOS's claim that it expects the value plunge to be reversed over time looks like a hostage to fortune, too. Hope is the flimsiest sort of hedge.

And for any banker to say that the market is wrong looks brave. Time after time in recent months it is the market that has been right and bankers who have been shown to be egregiously overoptimistic.

Yet shareholders should not despair. HBOS's Treasury team have a good reputation in the market and they certainly appear to have shied away from the most toxic of assets. Shareholders need to wait for the prospectus before making any decision on whether to risk throwing good money after bad.

The great banking boom of the past decade has now been revealed as a grotesque fiction. Bankers were not masters of the universe after all, except in a talent for lining their own pockets.

Yet pressure from shareholders for radical reform to align bank employee rewards with long-term shareholder returns has been muted.

It has been left to the Bank of England and the CBI to push for the change so obviously required. If it is not forthcoming, we will have learnt nothing - and can expect another banking boom and bust, another round of rights issues and another round of dividend cuts around 2020.

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