Pressure on bank chiefs to quit

Two former bank chiefs have stepped up public pressure on HBOS in their bid to force its chief executive and chairman to stand down.

Sir Peter Burt and Sir George Mathewson want to replace the men and scrap the Lloyds-TSB merger plans in favour of a recapitalised stand-alone bank.

The attempted boardroom putsch came to light on Saturday in a letter by Sir Peter and Sir George, the former BoS chief and RBS chief respectively, addressed to HBOS chairman, Lord Stevenson.

In it, the respected bankers stated that the £12 billion merger was "no longer necessary" given the Treasury's plans to inject cash into UK's creaking banking sector. Instead, Sir Peter and Sir George proposed taking over at the top of HBOS and re-evaluating the situation.

Sir Peter accused the HBOS board of running the company into the ground. He told the BBC's Politics Show: "We are saying that the HBOS board should put in two new directors who are independent and whose recommendations will not be tainted by past failure.

"We think that the HBOS shareholders have been sold short and we don't think that the takeover is in the public interest... It is the HBOS board who have led HBOS into the predicament and now they are saying 'trust us, our solution is the best way out'. Why should we trust them? They have run the company into the ground."

Lloyds TSB says it will be able to deliver annual cost savings of more than than £1.5 billion by the end of 2011 through their deal.

The letter opposes the merger and suggests that the two former bankers, once opponents, take over the top spots at HBOS. But Sir Peter added: "It doesn't have to be George and myself who provide the independent review. There are plenty other people the HBOS board could appoint to have a look and give the shareholders the assurance."

On Saturday night board members "unanimously" rejected proposals in the letter which accuses Lord Stevenson of being "determined" to continue with the takeover despite "terms which are perversely made worse for HBOS shareholders" by the Treasury's rescue package for banks.

HBOS put up a spirited counter attack, stating that Sir Peter and Sir George had put forward "no substantial alternative proposal".