HBOS directors cash in on share turmoil

HBOS senior staff made a collective £1.25 million profit according to reports as shares in the bank rose strongly in afternoon trading.

The UK's biggest mortgage lender saw its shares rise 17 per cent at one point today, as it emerged Andy Hornby, chief executive, led a group of seven executive directors to buy shares last Thursday at £4.46 each.

The buy has been seen as a vote of confidence in the lender, whose shares plummeted last week as rumours flew around that the bank was short of cash and had asked for an emergency loan from the Bank of England.

But assurances from HBOS and the Bank of England that the rumours were false, in addition to today's news the directors bought shares at their low point, restored investor confidence.

Shares in HBOS rose 14.47 per cent to £5.42 by mid-morning.

Mr Hornby stands to make a profit of £89,000 from his purchase, while Charles Dunstone, chief executive of Carphone Warehouse, who is also a non-executive director of HBOS, will make an extra £96,000 on his initial £446,000 investment in 100,000 of the bank's shares.

The Financial Services Authority is investigating "malicious rumours" that were spread last week, which sent HBOS shares plunging in value by 17 per cent.

Shares in global stock markets rose this morning after JP Morgan raised its bid for troubled bank Bear Stearns, with banks leading rises on the FTSE 100.