With hindsight, the decision of UK asset manager New Star Asset Management to borrow money to return £364m (€430.7m) to shareholders in April 2007 was hopelessly mis-timed.

Taking account of cash on its balance sheet, New Star's net debt shot up to £226m. To avoid a possible breach of banking covenants, chairman John Duffield was last week forced to renegotiate loan terms with the banks, led by HBOS.