HBOS’s shares tumbled 18 per cent yesterday, raising fresh questions about Lloyds TSB’s £5.2 billion all-share offer for the troubled lender.

The share price fall, down 12.9p to 59.9p, was the biggest on the FTSE 100 in a painful day of trading that wiped 13 per cent off the banking sector’s stock.

HBOS’s shares were trading at more than a 40 per cent discount to Lloyds TSB’s offer. Lloyds has renegotiated the deal once, cutting its offer price from 0.85 of a Lloyds share for every HBOS share to 0.605 per share.

Sources said that HBOS and its advisers were concerned that the deal would have to be renegotiated again, either because Lloyds wanted to push the price even lower or because HBOS’s own shareholders refused to back the deal.

One source said that several key HBOS shareholders were holding out for a higher offer. A source close to Lloyds said: “We have absolutely no intention of trying to renegotiate the deal.”

An HBOS spokesman said that the agreement remained on track.

Lloyds yesterday issued a time-table for the takeover, in which the bank will send a circular to shareholders in the first week of November. A meeting of shareholders to approve the deal will be held in mid-November.

The banks have asked the Government for a combined capital injection of £17 billion as part of the Treasury’s £400 billion bailout.

Lloyds will raise about £5.5 billion, comprising £4.5 billion of ordinary shares and £1 billion of preference shares. The ordinary shares will be sold at 173.3p each, considerably higher than Lloyds’s share price of 100.3p yesterday.

HBOS has asked for a £11.5 billion injection from the Government, comprising about £8.5 billion in ordinary shares at 113.6p and the rest in preference shares paying 12 per cent interest.

If institutional shareholders decline to subscribe, the Government will own 43.5 per cent of the combined banks.

More information on the capital raising, plus trading statements from both banks, will be contained in the circular going out in the first week of November.

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