Around 600 small shareholders on their way into the annual meeting of HBOS yesterday were greeted by a dinner-suited protester and three of his five daughters, all of whom alleged a housebuilder now owned by the bank had destroyed their houseboat.

As international finance markets pondered the significance of the Halifax and Bank of Scotland parent's proposed £4bn rights issue, Vincent Shalom passed out flyers entitled "family campaign for social justice" outside the meeting at the SECC in Glasgow.

Shalom's flyers guided shareholders to a website, claiming housebuilder Crest Nicholson seized his family's dream houseboat at Penarth Marina in Wales in 2004 and evicted them. Crest Nicholson was bought by HBOS and Ayrshire entrepreneur Sir Tom Hunter for £715m last year.

"We are struggling to come to terms with the total cessation of our beautiful and dedicated way of life, 14 continuous years in houseboat living," said Shalom.

"Up until the eviction, our five children had only ever lived this way of life. Nevertheless, we all still miss it so dearly. We miss our seven pet goldfish, too, which were also seized."

Crest Nicholson declined to comment.

Nonetheless, the very presence of Shalom and his three daughters outside HBOS's first annual meeting in Glasgow set the tone of general displeasure for the event.

HBOS chairman Lord Dennis Stevenson, kicking off the meeting, said: "This is by any standards an unusual meeting."

At that moment, things got even more unusual.

Chief executive Andy Hornby and finance director Mike Ellis flashed onto a giant screen by video link from London, where they had been briefing City analysts about the rights issue.

As soon as they appeared, one irate shareholder called out: "They should be here." Uproarious applause followed.

What came next was a barrage of angry questioning, which included another shareholder accusing HBOS directors of living in "gherkin-land" - a reference to the tall, bulbous central-London building known as The Gherkin, which pointed skyward on the backdrop behind Hornby and Ellis.

Hornby apologised for not being "with you" at the meeting. Few questions, however, were answered directly. Most responses were perceived by shareholders as long on gloss and short on substance.

Almost every negative point raised appeared to be transformed into an opportunity to emphasise the bank's apparent strengths.

Hornby talked up HBOS's "excellent performance" in what he described as "tough times" - although he added that "we cannot expect the same performance this year".

After one complaint about a particular Halifax branch, insurance and investment head Jo Dawson - referred to as "Dawsy" by Stevenson - instead thanked the shareholder for his compliments.

Nonetheless, referring to the rights issue, Hornby told shareholders: "We are planning for a more challenging environment ahead and the proceeds of the rights issue should ensure that we benefit from strong ratios even if the macroeconomic environment deteriorates further."

The rights issue and fresh credit crunch write-downs had been widely expected in the City, along with a gloomy forecast from the group for the UK economy and house prices.

Hornby made it clear that he expected the current market downturn to last "not just for 2008 and 2009" but for three or four years.

HBOS is the UK's biggest mortgage lender and had already predicted that average house prices would fall by a single-digit percentage this year for the first time in more than a decade.

Nonetheless, after the meeting, David Watkins, HBOS's head of retail products, defended the company's stakes in housebuilder Crest Nicholson and retirement-home builder McCarthy & Stone, which were acquired around the time when the UK property bubble was at its most inflated.

"The board's view is that these are very good companies with a very good long-term future," said Watkins. "We believe they were the right deals."

However, some industry observers believe that HBOS remains among the most exposed banks in the UK to falling property values, because of its emphasis on commercial property and mortgages.

Earlier, Stevenson defended to shareholders HBOS's reduction in its dividend pay-out ratio to 40% and its move to pay its interim 2008 dividend in shares - a move which caused further consternation at yesterday's annual meeting.

The company last year - just days before the start of the credit crunch - announced an increase in its pay-out ratio from 41% of earnings to 46%, a move which at best now looks like bad timing.

However, Stevenson yesterday said: "A company cannot pay out huge sums of money just after asking for more. That seems to us bad economics."

Meanwhile, asked if he was happy with the way HBOS was behaving in the current financial climate, one small shareholder from Prestwick, Frank Donnelly, told The Herald: "We've got to be. What choice do we have? We are only small shareholders, after all."