Attempted putsch at HBOS rejected

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In a letter to Sir Peter Burt and Sir George Mathewson, Lord Stevenson said their proposal to replace him and the bank's chief executive did not form "the basis of any further discussion between us".

The former banking chiefs had earlier written to HBOS calling on its two top men to resign in a bid to bring an end to the planned £12 billion merger with Lloyds TSB.

In their letter address to Lord Stevenson, the former heads of Royal Bank of Scotland and Bank of Scotland said the rescue takeover was "no longer necessary" given the Treasury's plans to inject cash into UK's creaking banking sector.

Instead, Sir George and Sir Peter proposed taking over at the top of HBOS and drawing up an alternative plan that included keeping the banking group independent.

In a return letter, Lord Stevenson told them: "The board has unanimously concluded that your letter does not form the basis of any further discussion between us."

Giving his reaction to the board's "unanimous" rejection of the proposal, Sir George - who served as chief executive and chairman at RBS before stepping down in 2006 - said: "I do not think it makes any difference to us whatsoever. It is what we suspected."

He added: "I think we will contact some shareholders and ask them what they feel about the proposal. It is all about evaluating the best way forward."

The pair intend to lobby shareholders into calling an extraordinary general meeting at which to seek the removal of Lord Stevenson and chief executive Andy Hornby. The men stepping down would then be replaced by Sir George and Sir Peter, under the plan.

From there, the banking heavyweights said they would be able to re-evaluate the Lloyds TSB deal in light of the Government's recapitalisation plan.