PRESSURE is mounting for the chief executive of Lloyds, Eric Daniels, to be sacked over his role in the takeover of Halifax Bank of Scotland.
Mr Daniels has faced calls to step down after doubts emerged over whether the takeover of the Edinburgh-based HBOS by Lloyds TSB had been fully justified.
And those calls have intensified since he admitted to shareholders last month that the deal
had been completed without 'due diligence' being carried out.
The other bank chiefs held responsible – former Lloyds chairman Sir Victor Blank, HBOS chairman Lord Dennis Stevenson and chief executive Andy Hornby – have all stepped down.
But The Scotsman understands Mr Daniels could survive because there is a reluctance at the top of government to push out the head of the part-nationalised bank.
Prime Minister Gordon Brown, Chancellor Alistair Darling and Business Secretary Lord Mandelson were all involved in ensuring that the takeover went through, creating the Lloyds Banking Group.
Small shareholders have been planning to sue the Lloyds board, amid accusations they had been misled about the levels of HBOS's toxic debt, as well as its liquidity problems.
Roger Lawson, chairman of the UK Shareholders' Association, said: "There is a bit more sympathy for Mr Daniels than there was for the former chairman, Victor Blank.
"But he was one of the people who made this ridiculous decision to take over Lloyds, and I think that at some point soon he must go."
Mr Daniels has faced further humiliation from EU Competition Commissioner Neelie Kroes, who said the size of the new bank might break competition laws. The Scotsman, and others, raised concerns about this at the time of the takeover.
Political calls for Mr Daniels's head were led yesterday by the Scottish Liberal Democrat leader, Tavish Scott.
"If Eric Daniels were the manager of a Premiership football team, lost all that team's money and its star players for no financial reward, then he would be sacked immediately," Mr Scott said.
"Mr Daniels has done the equivalent of that with Lloyds and HBOS. His actions will lead to the loss of thousands of jobs, and he should go."
He added: "Let's be in no doubt that Mr Daniels, along with Gordon Brown and Alistair Darling, are responsible for the mess we are in now."
Mr Scott made his call after the influential Lex column in the Financial Times said that the man expected to become the new Lloyd's chairman – Sir Win Bischoff – should sack Mr Daniels.
Malcolm Fraser, an Edinburgh architect and leading member of the Merger Action Group, which tried to block the Lloyds takeover, added his voice to the calls for the Lloyds' chief executive to go.
"Mr Daniels damned himself when he admitted that the takeover happened without due diligence," he said. "That is an extraordinary admission from the chief executive of a major organisation."
City insiders have made it clear many think that, in the short term, the HBOS takeover was a mistake. But they suspect Mr Daniels will stay, even though he is widely held to be largely culpable for the mistakes.
They believe Mr Daniels will survive because of the UK government's 43 per cent share in the bank.
One observer said: "The government's share in effect represents the majority, because only 70 per cent or 80 per cent ever vote. They will not sack him (Daniels] because it was the Prime Minister and Chancellor in particular who wanted this merger to go ahead, whatever the cost. In that sense, he was doing their bidding."
A Lloyds spokesman said the bank would not comment on Mr Daniels's future.
Darling aims to bring bankers 'back to earth'ALISTAIR Darling last night promised tighter regulation of the financial system as he warned that bankers who return to excessive risk-taking will be "brought back to earth".
The Chancellor indicated that next week's banking reform White Paper will include new powers for the Bank of England and Financial Services Authority to prevent a repeat of last autumn's meltdown.
Amid signs of the return of the bonus culture in the City of London, he warned that it would be "disastrous" if bankers got the idea that they could go back to their old ways.
"There are people who are too complacent in my view," Mr Darling said. "They need to be brought back to earth."
Some banks are still operating only because they have been rescued by taxpayers, said Mr Darling. "If they go back to the way they were – to business as usual – without asking themselves over and over again what they are doing, that would be disastrous for them and the rest of the world," he said. "As the economy begins to recover, people must not drop their guard but strengthen their guard to make sure they don't repeat the mistakes of the past."
The full article contains 816 words and appears in The Scotsman newspaper.
