The UK’s largest mortgage lender, HBOS, is expected to reveal a write down of up to £3bn tomorrow at its annual shareholder meeting.

The board is also expected to decide whether to go ahead with raising up to £4bn in capital through a rights issue to bolster its reserves.

The HBOS’s core tier 1 ratio, a measure of its strength, stands at 5.7% higher than the Royal Bank of Scotland which last week announced a £12bn rights issue to boost itself from a ratio of 4% to 6%.

HBOS has made gloomy predictions of the UK economy and forecast a modest single digit decline in UK house prices this year.

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