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Mae and Freddie Mac, two giant US mortgage corporations, had to berescued by the Federal Reserve and US treasury, sending investorson both sides of the Atlantic into a spin about what next mightbefall a deeply beleaguered banking sector.

With the attention of the City focused on the bearing struggling shareprice, Hornby also confirmed a long-running rumour that the bankwas to make job cuts. The announcement that 650 of its 65,000employees were to be axed across the UK made local headlines butwent almost unnoticed by the markets who were more concerned thatthe 拢4bn issue of new shares would get away smoothly.

Although B&B got investor backing for its critical 拢400m rightsissue rescue on Thursday, its executives came in for furthercriticism from shareholders. SLI, the buy-to-let lender's topshareholder, backed the rights issue but warned that it now neededto see action. "We look to your board to take steps to restorevalue to our clients' shareholdings in B&B," said Guy Jubb, head ofcorporate governance at SLI.

And while Barclays secured 拢4.5bn from investors on Friday tobolster its balance sheet, the bulk of the money will be providedby "anchor" investors led by Qatar, China and Singapore, ratherthan ordinary shareholders.

Against this grudging support, the board of HBOS will be hoping toplacate anxious shareholders and will do so by arguing that thebank is fundamentally sound. John Wriglesworth, economist at theWriglesworth Consultancy, said: "There's nothing wrong with HBOS'sstrategy. Of all the mortgage banks it is the only one that willsurvive as it is. It shouldn't change its strategy."

But analysts are divided on whether it is a likely takeover target.Spreng said: "There is no doubt that there's potential for atakeover. When the share price gets to a level where it isperceived as cheap, it leaves it open to potential suitors."

While Hornby has survived the rights issue, he must now regain thetrust of the City and investors. In March he proved he can takedecisive action when he moved quickly to quash rumours that HBOSwas in trouble after short-selling forced its share price toplummet. At the time he said: "I went on the front foot and issueda denial straight away."

But he has also been accused of errors of judgment, including hisdecision to go to London to address analysts rather than attend thebank's AGM in Glasgow in April.

Hornby will now be urged to move on from the current mire andexplain to employees, shareholders and customers exactly whatHBOS's strategy will be in the post-credit crunch era. He may haveto decide whether it is committed to being primarily a mortgagebank or if it should evolve into an all-round bank in the mould ofHSBC.

The next few months, or even years, will not be easy for anyfinancial institutions and Hornby is under pressure to prove he isa safe pair of hands, with the maturity and confidence to steerHBOS into better times.