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HBOS show of faith pays off

HBOS chiefs bought nearly £6m worth of the bank’s shares last week after the stock’s price fell sharply following false rumours of financial difficulties.

The share price fell by 17 per cent to a low of 398p at one point last Wednesday before finishing 7 per cent down at 446.25p.

Executive and non-executive directors and 250 senior managers bought around 1.3 million shares at about 446p on Thursday.

By market close this Tuesday, the share price had rallied to 544p, creating a joint profit of £1.3m for the buyers. Chief executive Andy Hornby bought 92,812 shares with £414,000 of his annual bonus. He was joined by six executive directors, including chief operating officer Philip Gore-Randall and group finance director Mike Ellis.

The fall led the FSA to warn that it would launch an investigation into allegations of traders spreading untrue claims that the bank was on the brink of collapse. The Bank of England took the unprecedented step of stating that HBOS had not asked for emergency help.

John Charcol senior technical manager Ray Boulger says: “HBOS’s directors buying a large amount of shares is a good way of demonstrating confidence in the firm.

“It is a strong indication that there is not any problem with HBOS.”

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