Demand for a block on HBOS's 'rewards for failure'

Troubled bank HBOS was today under pressure to block "rewards for failure" to departing directors worth £2.7 million.

After HBOS completes its emergency merger with Lloyds TSB, only two of its top eight directors will join the enlarged bank's senior management team.

Five of the six directors frozen out of the top jobs are entitled to a combined payoff of £2.7 million if they leave but any such deal would cause outrage.

Taxpayers are set to own 43.5% of the combined bank after Lloyds TSB and HBOS tapped the Government for £17 billion of cash in its bailout package.

As part of the deal, Chancellor Alistair Darling insisted there will be no rewards for failure. HBOS said no decision has been made on the matter.

Michael Fallon, deputy chairman of the Treasury Select Committee, which is set to investigate the bank's downfall once the deal is complete, said:"The public have a right to know about rewards for failure. We'd expect any package to be disclosed and if they're not, we have the power to require that they are."

HBOS chief executive Andy Hornby and chairman Lord Stevenson have agreed not to take golden goodbyes when they leave.

But Peter Cummings, chief executive coporate, Mike Ellis, finance director, Philip Gore-Randall, chief operations officer, Colin Matthew, treasury head, and Dan Watkins, chief executive retail, are all entitled to severence payments if they leave.