Jon Moulton, the private equity chief, warned a City lunch this week that he feared serious civil unrest. There was, he said, a 25 per cent chance of one of the 15 member countries of the eurozone pulling out of the currency club. That, he said, would be a catastrophic shock leading to a “far greater financial crisis” than the current one.

The mind boggles at a financial crisis far worse than the current one. Is such a thing possible? Even with this one, it may already be too late to prevent social unrest, especially in Britain, which is tipped to be one of the worst-hit countries economically.

The spectacle of bankers continuing to award themselves bonuses while taking taxpayer support is feeding an extraordinary public rage and a fierce sense of injustice. With 40,000 people losing their jobs each month, it is a recipe for trouble, come the traditional rioting months of the summer.

It won’t be bankers being lynched, of course, but small shopkeepers in inner-city areas having their windows smashed and their stock looted. The only surprise is there haven’t already been antibanker demonstrations in Threadneedle Street – secretly cheered on by 99 per cent of Middle England.

The seething sense of unfairness is almost palpable. The view that a small elite not only caused the crisis, but continues to profit at the expense of everyone else, is near universal. Gordon Brown’s promise of no rewards for failure in state-supported banks is looking ever more threadbare. We now know that Peter Cummings, the highest-paid person on the HBOS board, headed a division responsible for £7 billion of losses last year, yet he was still given a reported £660,000 payoff when he left in early January clutching his £6 million pension pot.

The suggestion by Lord Myners, the City minister, that some bankers simply have no sense of the broader society around them is getting harder to refute. To be preparing to pay out billions of pounds in discretionary bonuses over the next few weeks suggests an ignorance of the public mood and a single-mindedness bordering on sociopathic.

All this may be a bit of a side show for Sir Victor Blank and Eric Daniels, chairman and chief executive, respectively, as they try to stop the water slopping over the gunwales of the combined Lloyds/HBOS. Yesterday’s bombshell was grave for the bank, dispiriting for taxpayers and damaging to the chief executive. The timing is acutely awkward, coming just 48 hours after he appeared before the Commons Treasury Select Committee. MPs might have pressed him rather harder if they had known what was just around the corner.

The £10 billion loss at HBOS is humiliating enough, but the admission that the losses are £1.6 billion worse than when shareholders were asked to approve the deal in November is worse. Lloyds got HBOS to sweeten the terms twice. With hindsight it still wasn’t enough. Mr Daniels admitted to Parliament this week that he was not able to conduct as much due diligence as in a normal deal. His shareholders and UK taxpayers are now paying a heavy price for that failure.

The 32 per cent slump in the Lloyds share price yesterday speaks volumes about the market’s fears. Although Lloyds insists its balance sheet is still strong, the need for additional capital will be back on the agenda. If HBOS’s corporate loans could have soured by £1.6 billion in the space of just a month, its surplus capital cushion could quickly be wiped out. That could lead to full nationalisation eventually.

Lloyds says that one of the reasons for the losses was the more conservative methodology it uses for gauging potential loan losses. That comes close to suggesting the old HBOS board was somewhat less than conservative itself. If the reputation of the old guard at HBOS, including Gordon Brown’s former favourite Sir James Crosby, is capable of sinking any lower in the public estimation, it will now be doing so.

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