Shares in HBOS slumped on Monday as the sheer scale of the flop of the bank’s £4bn rights issue unnerved investors.

The UK’s biggest mortgage lender revealed that just 8.3 per cent of its investors took up their allocations in the 275p rights issue – a result that came in below even the most pessimistic market expectations. In the subsequent frantic efforts to place unsold stock directly in the market, the underwriters of the issue, Morgan Stanley and Dresdner Kleinwort, were able to find buyers for only around a third of the rump to lift the eventual take-up to 38 per cent.