Q1 : Mrs Scott : Objects to the Chairman saying that there should be no questions on “personal issues”. Argues that all questions are “personal” as we are shareholders. Not amused concerning Trinity or Tolcross (what are these?). “It’s all about rights, Dennis”.

Q2 : RBS have gone to a scrip for their next dividend. Shouldn’t HBOS do the same? Chairman confirms HBOS will be paying a scrip dividend at the half-year. The dividend will also be lower.

Q3 : Mrs Edmonds : A rambling question/statement covering the “number of zeroes” in the salaries of the top people. Why are such high earners making such bad decisions? What justification is there for these high salaries? Second part of question asked what facilities (eg training) there were for branch staff to make their way up to the top echelons, including the Board of HBOS? The questioner suggested that the Board does not have its roots in the branches. Too many HBOS people were “in guerkin land” referring to the City of London.

Chairman replied that training and advancement from the branches were indeed an important. Jo Dawson (Director responsible for xxxx) said that several of the current Board members had indeed started at branch level although not necessarily within HBOS. Jo Dawson said she had started ion a branch of NatWest.

Karen Jones, chair of the Remuneration Committee, was asked to respond to the “too many zeroes” aspect of the question. Ms Jones advised that HBOS salaries were at industry medians rather than in higher quartiles, with a substantial part of the reward of higher salary earners being in the form of shares. On average the Board received 2.75 times their basic salary in shares (check this), whereas for the chairman the ratio was nearer to 4-to-1.

Q4 : Bill MacIntosh : An interesting question concerning property repossessions. Why does the company not rent out rather than auction off repossessed properties? This, he argued, would avoid the severe personal problems which can be caused by the repossession of properties on which there are payment defaults.

The Chairman referred this to Dan Watkins (board member….XXX), who said that HBOS tried to avoid having to repossess properties, recognising the problems that this can cause. Repossession is very much a last resort. HBOS does not wish to repossess properties. The Chairman said that HBOS would look at any scheme which included the government or others to avoid repossessions and asked Mr MacIntosh to contact him further concerning the issue that he raised. At this point the Chairman also cautioned against assuming that there would indeed a major collapse in house prices, talking of self-fulfilling prophecies.

Q5 : Lance Blackledge (on bus) re Chalkhill Garage Ltd and appalling treatment by Capital Bank. [Expand from notes and from the PR on his web-site later on].

Q6 : Mr Anderson (South Wales)

1. No index in the Annual Accounts, although one had been promised last year.

2. Appaling service from BoS International. He said he had an account (in Euro) but that about one quarter of the small number of transactions through the account in the past year were wrong.

3. Asks about a large advert offering buy-to-let mortgages in the Swansea office, even though HBOS had already said that it was now no pursuing that market so aggressively.

Q7 : Brian Dewench (?)

Complains that Bank of Scotland is virtually invisible in England whereas the Halifax network of branches is the visible face of HBOS. Asks what HBOS needs to do to attract higher level investors, given that the services offered in Halifax branches are relatively low-level. Despite the take-over, there is no perceived improvement in the level of service available from Halifax branches.

Q8 : Tom Scott :

Concerned that HBOS shares are rated as a “sell”. This somehow appears to be in contradiction with HBOS’s own more bullish statements. In reply the Chairman talked of how shares can go up as well as down etc etc.

Q9 : Mrs Maggie Foster

A vague question/statement talking of imprudent management, and asking whether it was time for a transparent and honest way of doing business?”

Q10 : Mr William Morrison

Last Interim Report said that HBOS would be chasing mortgage market share, so who now will be fired for taking on such risky mortgages?

In reply it was stated that HBOS’ share of the UK mortgage market had in fact reduced , and that the decision had been taken some years ago not to actively chase market share.

The Chairman then argued that “fair value asdjustments” did not represent losses and that it was technically incorrect to talk of “losses”, as these adjustments were part of the recently (18 months ago) introduced IFRS.

Q11 : David – a local Glaswegian in a cloth cap made some rambling statement most of which was incomprehensible to those unfamiliar with strong Glaswegian accents. Of the few words decipherable only “lame duck company” comes to mind. The Chairman finally cut off David, and moved on to another questioner.

Q12 : Rights Issue

Q13 : Mr Rice

Customer complaints letters not answered properly. The people handling them are too low down the chain.

Q14 : John Whitingham

Higher savings rates for long-term savers?

70-year limit to be removed?

Dan Watkins again asked to respond by Chairman, who described himself as a long-term depositor with HBOS. Dan Watkins’ although full of platitudes “retail savings is the bedrock of the business” he did not come up with any answer to the question about increased interest rates for longer term savers. Probably sensing that the question had not been answered satisfactorily, he suggested that the questioner contact DW directly.

Q15 : Mr Simons

Re the shorting of the HBOS share price – how to find these defrauders? Scandlous behaviour, but thanks for the promt action taken by the CEO (AH), who was able to contact the FSA and industry journalists within minutes of the trashing of the share-price being spotted. As a result of which the share-price had re-bounded by the end of the day. Although saying it was not his own words, the Chairman recounted how others had described this event as “a deliberately crocked act”.

Q16 : Adamson

Treasury and Risk Management had failed in their mandate. At this point Mike Ellis (on the video link) spoke for the first time, saying how HBOS as now managing its portfolios closely….. Until then only AH had said anything on the video link.

Q17 :

Question re share buy-backs : Buying the companies shares back at £10 or £11 looks like a fool-harding in retrospective given hat new shares in the Rights Issue are being sold at £2.75. This is poor business! The dividend would have to fall to a lower level otherwise the yield would be about 12%. The questioner also turned to “exotic” assets suggesting that such a term were more suitable to a nightclub than to a major bank. The term exotic assets was somehow at odds with the “conservative” approach to business advocated by the company.

Q18 : David Rutherford, Edinburgh

Concerned that the voluntary bankruptcy industry was having an adverse effect on the bank industry, because borrowers in trouble were encouraged by these companies to go into voluntary liquidation or bankrupty.

The Chairman expressed sympathy for this view.

Q19 :

Q20 :