HBOS is set toadmit to one of the most disastrous rights issues in corporate history when it concedes that as few as 10% of its investors took up its £4 billion share offer.

Its two underwriters, Morgan Stanley and Dresdner, will have to place £3.6bn of shares over the course of Monday or Tuesday.

If they are unable to place the shares at the rights-issue price of 275p or above, they will be forced to take them on to their own balance sheets.

The two investment banks are thought to have sub-under-written about 40% of the issue but it still means they could be left with £1bn worth of shares each.

Sunday Times, Financial Times