Shareholders' bill for Lloyds shotgun wedding | Cummings earned more than the boss | The man who broke HBOS with a £7bn loss | Britain’s bankers plumb new depths

Taxpayers could have to spend billions bailing out the banks again after massive and unexpected losses were disclosed by Britain’s new superbank.

Shares in Lloyds Banking Group fell 32 per cent to 61.4p yesterday after it reported losses of £10 billion in HBOS, making it worth far less than thought when it was taken over in November.

The news, a huge embarrassment for Gordon Brown, who helped to broker the deal, triggered speculation that the bank will have to come back to the Government for more capital.

George Osborne, the Shadow Chancellor, suggested that the cash pumped in for the first bailout in October was “all but wiped out” by these losses. He said: “HBOS bankers like James Crosby bear a heavy responsibility, but so too does his ally Gordon Brown who created the system of bank regulation that allowed this reckless risk-taking to run amok.”

Alistair Darling, the Chancellor, defended his role in helping to push through the takeover, saying: “We had a matter of days and then hours to stop the entire banking system collapsing.”

The timing of the profits warning to the Stock Exchange was particularly embarrassing the Lloyds chief, Eric Daniels, who gave no hint of it three days ago when he was grilled by MPs on the Treasury Select Committee.

Lloyds said that it had only just appreciated the scale of the problem, having completed the purchase on January 19. The losses were £1.6 billion worse than Lloyds expected in November when it gave shareholders its reasons for buying HBOS.

The Government put £17 billion into the banks just before the deal was completed and owns 43 per cent of the enlarged Lloyds. That stake is now worth £8.3 billion less, a loss equivalent to 2½p on income tax. The brunt of the losses were incurred in HBOS’s corporate division, which was investing in property-backed deals long after other banks had stopped. It lost £7 billion. Peter Cummings, who headed the division, is said to have left in January with a payoff of about £660,000 and a £6 million pension pot.

John McFall, chairman of the select committee, said its inquiry showed that due diligence checks should be at the centre of any takeover. Mr Daniels had admitted that he had not been able to conduct as much of it as he would have liked. “That is now shown to be a massive understatement,” Mr McFall said.

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