The two Scottish banking grandees trying to scupper Lloyds TSB's takeover of the rival HBOS said yesterday they have no plans to give up, despite the Prime Minister Gordon Brown and the Opposition leader David Cameron both agreeing there was no real alternative to the deal.
Sir George Mathewson and Sir Peter Burt, former chief executives of Royal Bank of Scotland and Bank of Scotland respectively, want to take management control of the Edinburgh-based HBOS and consider alternative options for the bank.
They said the Lloyds deal – put together over a weekend under Government pressure to rescue the Scottish-based institution – was rushed and that HBOS did not take the time to look into other options to present shareholders with the best outcome.
"A properly recapitalised, properly run and independent HBOS appears to be in the interests of the shareholders, its employees, its customers and all stakeholders, avoiding the dangers of an anti-competitive over-mighty leviathan,"Sir Peter and Sir George said in a statement yesterday.
"HBOS shareholders are entitled to know the basis for the board's decision and why the board decided not to seek this route as opposed to simply selling out," Sir Peter and Sir George said. HBOS responded that it stands by the Lloyds deal. "They are not providing anything tangible for shareholders or any certainty," a spokesman for the bank said. "The Lloyds deal provides certainty and is a recommended deal that will provide value for shareholders."
Sir Peter and Sir George said that if installed they would consider all options and "seek either shareholder support for a corporate transaction or alternatively would finalise a plan to keep HBOS independent," using the Government's bailout facility for banks.
The deal, first announced in September, was renegotiated along terms more favourable to Lloyds on 13 October after a month of chaos in the financial sector undermined valuations.
Authorities waived competition rules to allow the takeover and the Government has offered to give the combined bank £17bn of public money as part of a rescue plan for all banks. This could give it a 43.5 per cent stake.
The Financial Services Authority said the deal with Lloyds provided "a sustainable medium-term future for HBOS in a way that none of the alternative scenarios does", and several top shareholders said this week they did not expect Sir Peter and Sir George's proposals to be taken seriously.
Mr Brown earlier this week dismissed calls for the deal to be scrapped, insisting Lloyds was the only "serious" bidder.
Derek Simpson, joint general secretary of the Unite trade union, which represents HBOS employees, said: "Unite has serious doubts about the plans by Sir Peter Burt and Sir George Mathewson and their motives. They have failed to come up with any concrete proposals or any money, and it is irresponsible of them to threaten the proposed merger between HBOS with TSB."