Sir Peter Burt, former chief of the Bank of Scotland credited with creating HBOS and Sir George Mathewson, credited with transforming the Royal Bank of Scotland to a world power in banking, have entered the debate on the future of HBOS.

They say that HBOS and its shareholders would be better off if the bank were to remain independent rather than entering into the proposed, almost done-deal, of the £12.2 billion takeover by Lloyds TSB.

They have written to HBOS demanding the resignation of both its CEO, Andy Hornby and Chair Sir Dennis Stevenson, neither of whom have been adopted into the proposed management structure of the new superbank, if the takeover goes ahead.

The two men argue that, with the government and Bank of England offering vital funds to replace those that could be withdrawn by money managers and other creditors, there is no longer any need for HBOS to be taken over by Lloyds TSB.

Their letter, sent to Sir Dennis Stevenson, says: ‘It is our intention to create a detailed alternative plan that we believe will represent better value for both the HBOS shareholders and stakeholders alike by keeping HBOS as an independent bank’.

Given the individual and combined experience of the men in question, the HBOS board will not find it easy to ignore such a proposal. Their call for the resignation of the CEO and Chair of the bank will also find a response in the public anger with those who have brought the bank to its present predicament.

Their proposal to the HBOS board is that they would step in and stay in post until the bank is on a stable footing as an independent, recruiting credible top management to replace them. The scenario put forward is that Sir George Mathewson would become the new Chair of the bank and Sir Peter Burt would be its CEO.

They intend to canvas shareholders to requisition an emergency meeting to have Stevenson and Hornby removed, if they refuse to choose to resign.

9th November Story Update: The HBOS Board have unanimously rejected this approach but Sir Peter and Sir George say they still intend to call for an extraordinary general meeting for HBOS shareholders to express their views. Sir Peter Burt has confirmed that he has had a letter from Chancellor Alastair Darling confirming that the funds available to support HBOS in the Lloyds takeover will equally be available to an independent HBOS.

As For Argyll has pointed out before, the Fat Lady is still her dressing room.

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