REUTERS/Luke MacGregor
Andy Hornby, CEO of HBOS (L), Eric Daniels, CEO of Lloyds TSB (R), and Victor Blank, Chairman of Lloyds TSB, pose for photographers after a news conference, in the City of London on September 18, 2008. Lloyds TSB sealed a rescue takeover of HBOS Plc to create a dominant British mortgage and savings bank in a deal helped through by the government.
Lloyds shareholders saw the value of their stakes collapse as bank took on non-performing assets from HBOS at the height of the financial crisis.
But Blank said the merger averted a worse crisis that would have left investors with nothing.
Blank said: "The only people who would argue that they suffered - and they have - is shareholders," according to the FT. "But if I'm right that the banking system would have collapsed and been nationalised then they should be grateful."
"If we hadn't bought HBOS … the whole system would have failed," Blank is reported to have said.
HBOS, which owned the Halifax and Bank of Scotland brands, suffered heavy losses in the 2008 financial crisis and neared collapse as its funding was cut off by the credit crunch.
It had to be rescued by a combination of a public bailout and a merger with Lloyds TSB, costing the taxpayer around £20 billion ($30 billion) in the early part of 2009.