Salmond urges HBOS to think again

HBOS has said it wants the deal with Lloyds TSB to go ahead

HBOS should reconsider a move by two of Scotland's top bankers to take over the running of the troubled bank, First Minister Alex Salmond has urged.

Sir Peter Burt and Sir George Mathewson want to reject the takeover by Lloyds TSB and see HBOS remain independent.

They have launched a website calling on HBOS shareholders to support them.

Mr Salmond said the UK Government's decision to bail out a number of banks threw the merger deal into doubt. HBOS is recommending the merger goes ahead.

Sir Peter, formerly of the Bank of Scotland, and Sir George, former head of the Royal Bank of Scotland, have challenged HBOS to appoint them to lead the bank.

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Sir Peter said a Lloyds TSB takeover would leave HBOS shareholders and staff worse off.

But HBOS said the men's plan offered no value for its shareholders and that it could see no grounds for further talks, so the two bankers will need to attempt to force an extraordinary general meeting by gathering the support of 10% of shareholders.

If they succeed, they will then need the backing of 51% of shareholders to actually oust HBOS chief executive Andy Hornby and chairman Lord Stevenson.

Speaking on BBC Radio's Today programme, Mr Salmond said the wide-scale collapses and recapitalisation in the banking sector meant the deal to rescue HBOS had been overtaken by events and HBOS could be supported to retain its independence.

He said: "It wasn't a specific issue affecting one bank, it was an issue affecting a number of financial institutions.

"Therefore if the public money is going in to support the financial sector then it's reasonable to find out whether we can do that and avoid consequences like thousands of job losses, the loss of decision-making and what we already know from the Office of Fair Trading - a substantial diminution of competition throughout the economy, affecting businesses and households."

This deal is in the interests of financial stability right across the UK Shane O'Riordain HBOS head of communications

Sir George conceded that he and his partner had no specific deal to offer at present.

He said: "We're saying let us take it over and we will explore all the alternatives that will arise.

"We believe HBOS itself can be independent given the new capitalisation of the banks.

"We also believe there may well be other alternatives, other than Lloyds, that will give better shareholder value and a better outcome for the whole of the UK."

Shane O'Riordain, head of communications at HBOS, said the men were not offering shareholders anything.

He told BBC Radio's Good Morning Scotland programme: "We have a clear recommended deal with Lloyds TSB which provides certainty to all our stakeholders, including our colleagues and our shareholders in Scotland.

"That's particularly important, and it's also worth remembering that this deal is in the interests of financial stability right across the UK.

"Many of our 23 million customers will be naturally keen to see this deal complete on time."

Meanwhile, Scottish Liberal Democrat leader Tavish Scott stepped up his party's campaign to stop the HBOS takeover.

He has written to HBOS chairman Lord Stevenson and chief executive Andy Hornby inviting them to a meeting, where they would be joined by Liberal Democrat shadow chancellor Vince Cable.

In his letter, Mr Scott wrote: "Merger with Lloyds TSB was a plan meant for a very different world. It was devised before the taxpayer stepped into UK banking with billions of pounds of investment.

"HBOS management needs to demonstrate why they are sticking so doggedly to the old plan even now that there is new money on the table."