Sir Peter Burt, former chief executive of Bank of Scotland, today accused his successors at HBOS, which had to be taken over by Lloyds TSB last month, of being “greedy”.

Burt was one of the key architects of the merger of former building society Halifax with his own Bank of Scotland to create HBOS in 2001. He stayed on as deputy chairman of the enlarged group for another two years.

Today he told the Herald newspaper the latest banking-industry crisis is “ a storm in a teacup”. He described the furore over potential losses of £11 billion for HBOS as more “an opportunity to kick the Prime Minister and kick bankers” than as indicating fundamental problems.

Despite his words, Lloyds shares fell again today, down 3.8p to 52.6p, after further downgradings by City analysts. Credit Suisse slashed its share-price target from 90p to 55p.

Burt admitted that Bank of Scotland had, at the time of the merger, been “overly dependent on wholesale money, and that is why Halifax was such a good deal.”

“In those days Halifax was a well-run organisation with a huge savings deposit situation,” he said. “Wholesale funding was relatively low.”

Halifax then got 85% of its lending from savers, while BoS was about 53% self-funded. Burt said the merged bank grew its balance sheet from £400 billion in 2003 to £666 billion in 2007.

He commented: “Obviously they didn't manage to keep the ratios where they were at the time of the merger. They got it wrong. They just got greedy.”

Last year Burt failed in his bid —alongside fellow Scottish banker Sir George Matthewson — to prevent the Lloyds TSB deal and take over HBOS themselves.

Lloyds and HBOS received £17 billion in bailout funding from the Government, but ministers have been keen to play down suggestions that the merged bank could be fully nationalised. At the moment the taxpayer owns 43% of Lloyds Banking Group.