Andy Hornby, the chief executive of HBOS, said the credit crunch would create a fundamental shift in the mortgage market but would create opportunities for the bank as some rivals found it increasingly expensive to borrow money.

In a speech, Hornby said HBOS's scale in areas like corporate banking would also mean that growing risk aversion on the part of wholesale lenders provided the banking giant with "real opportunities for value creation growing forward".

While HBOS's share of net mortgage lending slumped in the first half after the bank changed its pricing strategy, Hornby said a correction in credit markets could help the group gain an edge over some players.

In the wake of a surge in defaults on sub-prime loans in the US, money-market lenders have put higher risk premiums on rates charged to borrowers reflecting their increased fear of default.

This has pushed up the cost of borrowing on wholesale money markets. Difficulties obtaining money-market funding forced Northern Rock to seek emergency loans from the Bank of England, sparking a run on the mortgage bank.

The problems have already fed through into UK mortgage markets with some lenders raising the rates they charge on tracker mortgages.

Changed money market attitudes to pricing risk "will inevitably lead to a slowdown in the mortgage market", Hornby told a banking conference in London organised by investment bank Merrill Lynch.

However, he said firms like HBOS with scale and trading strength would emerge as the winners from this process.

They should be able to borrow at better rates than rivals that lack scale or are very relient on wholesale markets.

Hornby said HBOS had adjusted the length and diversity of its funding sources over the past six years.

Only 16% of the bank's term funding matures within one month compared to 40% five years ago.

Helped by its ownership of Halifax, the former building society, HBOS has a huge depositor base.

Hornby said while capital markets would be unpredictable HBOS's corporate unit was "well placed to deliver sustainable growth going forward".

The group moved to increase its share of the key small and medium-sized enterprise market by launching an account it said was the first to offer businesses the kind of pricing enjoyed by consumers.

The Total Business account will pay interest on credit balances at 5.75% gross, in line with Bank of England base rate. It is open to firms with turnover of up to £1m, making an initial deposit of £10,000.

Transactions like counter pay-ins will be charged at 30p each.

HBOS said it would cost its big four rivals £500m collectively to match the benefits offered by the new account.

The bank introduced the account in the wake of the Competition Commission's provisional decision in August to scrap price controls, which required the UK's biggest four clearing banks to pay credit interest of 2% below Base Rate on balances.

Mike Trippitt, an analyst at Oriel Securities, said better capitalised banks with diverse businesses would be better placed than others to benefit from the repricing of risk.

Shares in HBOS closed up 39p at 950p yesterday. The banking sector benefited from growing confidence in the US that the worst effects of the credit crunch on bank earnings may be limited to the third quarter.