The Bank had £150bn ready to stop a run

The Bank of England feared that it might need up to £150bn of emergency funds – more than double the figure which it admitted to last week – to pump into the banking system to prevent a run on the banks in October last year.

The full extent of this enormous emergency rescue plan, which was put in place over the first weekend in October, emerged after Mervyn King, the Governor of the Bank, revealed to the Treasury Select Committee last week that it had provided £62bn of secret tax-payer backed loans to Royal Bank of Scotland and HBOS last autumn.

Sources told The Independent on Sunday this weekend that the Bank was on standby to lend more than double the £62bn because of fears that a number of big depositors were preparing to pull their money out of the UK the following week, as they feared for the solvency of the banks, one source said. "The bank knew of several large depositors which had maturing liabilities which were due to be renewed the following week. It was made plain to the Bank that these depositors, including corporates and overseas sovereign wealth funds, had lost confidence in the UK and were going to pull out their money when those deposits matured. It had up to £150bn on standby to be used if necessary to keep the banks afloat."

At any one time, the Bank has its own projections of what is happening in the money markets, allowing it to track any big movements which are due to take effect, and which may upset the markets. Fears that these big depositors would remove their money at such a fragile time prompted the Bank, working with the Treasury and the bosses of all the UK's big banks over that weekend, to put together the emergency package. It was only this September that Mr King confirmed just how close the system came to meltdown when he revealed that RBS and HBOS came within hours of a liquidity shortfall on Monday, 6 October, and the following day and that they could only raise money for one week, then only for one day.

Support for HBOS, since taken over by Lloyds Banking Group, began on 1 October, two weeks after the collapse of Lehman Brothers which triggered the collapse in bank customer confidence. The first week of October saw the Bank lend to RBS and then on 8 October the Government announced it was injecting up to £50bn into RBS and HBOS, taking stakes in return. The Bank revealed RBS borrowed £36.6bn on 17 October and HBOS £25.4bn on 13 November, both now repaid. Mr King said the loans could now be revealed as there was no longer a risk of a "potentially systemic disturbance" to the system.

But news of the HBOS loan has sparked further outrage among Lloyds' shareholders who are furious they were not told about the HBOS loans at the time of the merger. Investors are considering suing Lloyds and the Chancellor on the grounds that if they had been told how bad the HBOS situation was, they would not have approved the merger.