HBOS chief executive Andy Hornby yesterday conceded he did feel to blame personally for putting thousands of his employees� jobs in jeopardy.

HBOS chief executive Andy Hornby yesterday conceded he did feel to blame personally for putting thousands of his employees' jobs in jeopardy as a result of the Bank of Scotland and Halifax parent group's need to do a deal with Lloyds TSB.

Hornby cut an unrepentant figure in the City last Thursday when the hastily-arranged deal with Lloyds TSB, viewed by the City as a rescue take- over, was announced.

However, asked by The Herald yesterday if he felt in any way to blame personally, given that he was at the helm when HBOS found itself needing to do a deal which would involve large job losses, Hornby replied: "Of course I do. Of course I feel responsible for that."

He said that the banks would "manage this process (of job cuts) very carefully over the next two to three years".

Many thousands of job losses look certain to follow from Edinburgh-based HBOS's effective takeover by Lloyds TSB, with Hornby declining again yesterday to put any figure on the number of posts to be cut.

He also told The Herald yesterday that, "when the credit crunch started, it was clear the (HBOS) business model needed to change" in terms of the bank's reliance on wholesale credit markets to raise much of the money it lends on to its customers. The global credit crisis kicked off in earnest in summer 2007 amid massive default on mortgages by households with poorer credit ratings in the US.

HBOS entered deal talks with Lloyds TSB at the beginning of last week. On Thursday last week, the pair announced a deal which valued HBOS at £12bn and its shares at less than one-fifth of the near-1200p highs they hit early last year.

Hornby was confident yesterday that shareholders of HBOS, which was formed by the 2001 merger of Bank of Scotland and Halifax, would approve the deal.

Asked about his perception of the mood of institutional investors, who with their large shareholdings have much more clout in publicly-quoted companies than individuals who own stock, Hornby replied: "I think, in general, shareholders are saying we did the right thing.

"In incredibly difficult circumstances, we acted quickly and decisively and we got an agreed deal."

It is understood the Treasury felt it vital for the stability of the financial system that HBOS agreed a deal with Lloyds TSB within days. Pressed on how many days HBOS had had to get a deal done, Hornby said: "I wouldn't go that far. It was right to get it done, and get things concluded."

Interbank lending markets seized up at the start of last week, after the collapse of US investment bank Lehman Brothers.

Asked whether HBOS's reliance on wholesale funding in its business model had been an error, Hornby claimed: "It has been that way for 20 years. What I accept is I have been in the job two years. What I accept is, when the credit crunch started, it was clear the business model needed to change.

"We did a couple of things. First of all, raise capital (£4bn in a rights issue) and, second, reduce reliance on wholesale funding. There is no doubt this (Lloyds TSB) deal is the best way of doing that."

In Scotland, First Minister Alex Salmond has claimed HBOS was driven into the arms of Lloyds TSB by short-sellers. Such players sell shares which they do not own in the hope that a company's share price will fall and they can turn a profit.

But it is understood the Treasury, which helped broker the deal with Lloyds TSB, is in absolutely no doubt that it was HBOS's reliance on wholesale markets to raise funds to lend on to customers which was at the heart of the bank's troubles.

Asked whether HBOS's reliance on wholesale funding had, given the way the market had turned, been a more important factor than short-selling, Hornby replied: "What exactly drove the febrile markets is a whole combination of factors...not least Lehman's."

He noted the "incredible volatility in equity and debt prices" early last week.

Hornby also cited the move of giant US mortgage companies Freddie Mac and Fannie Mae into state ownership earlier this month and Wall Street investment bank Merrill Lynch's agreement to sell itself to Bank of America for $50bn.

Asked what would happen if institutional shareholders were to vote down the Lloyds TSB deal, Hornby replied: "Like all deals, we have to get it through shareholders. We are sure we can get shareholders on side."

Pressed on what the alternative would be, he replied: "The alternative is the business carries on but I am really confident shareholders want this to happen."

Hornby said of the deal with Lloyds TSB: "I do believe it provides the best opportunity for the Bank of Scotland, the old Halifax business and the business generally having growth going forward."

He added that HBOS shareholders would be entitled to 44% of "synergies" - cost savings and revenue benefits - arising from the deal.

Although declining to put a figure on the job losses which would arise, Hornby described one reported figure of 40,000 across the enlarged group as "so ridiculous".

Hornby noted Lloyds TSB had last week talked about taking 10% out of the combined cost base. However, pressed yesterday on whether the number of job losses would be greater or less than 10% of the combined 139,000 workforce of HBOS and Lloyds TSB, Hornby would not say. This would seem likely to raise fears among the workforce that it will be more than 10%.

HBOS employs about 17,000 people in Scotland out of a UK-wide headcount of 65,000 and worldwide total of 72,000.

Lloyds TSB has a workforce of 7200 in Scotland, out of a total headcount of 67,000. In a memo to staff, seen by The Herald, Hornby says: "I know that many of you are naturally concerned about your job and the possible impact of the deal on you and your family. Rest assured that we will do everything we can to end the uncertainty for you as soon as we can.

"Please remember though that the deal has just been announced so there is a lot of work to be done in the next few months. We will begin working through the detail with Lloyds TSB...I promise you that this is my top priority."