Darling rejects Salmond's claim bank could have been saved

ALISTAIR Darling, the Chancellor, hit back angrily yesterday following Nationalist claims that he should have done more to save HBOS.

Alex Salmond has accused the UK government of standing "idly by" while HBOS was taken over by Lloyds TSB.

The First Minister also argued he would have pumped in billions of pounds to keep HBOS intact had he been running an independent Scotland.

Yesterday, Mr Darling retaliated, insisting that the Lloyds TSB takeover was the only realistic option for HBOS and the UK government had done the right thing in helping that deal get started.

The Chancellor said of HBOS: "Like so many other banks, it got into difficulty. This didn't happen over the last few days, this has been something which has been building up, and, by the beginning of this last week, it was quite clear there needed to be a fundamental solution. There was no alternative – it had to go in with Lloyds TSB.

"Everyone recognises that HBOS would have been in real difficulties if it had not gone in with Lloyds TSB and created a bigger bank."

Mr Darling also derided Mr Salmond's suggestion that the UK government could have put in billions to keep HBOS afloat, preventing the Lloyds takeover.

"He (Mr Salmond] is the only one in the world who thinks that. The two boards of HBOS and Lloyds TSB, themselves, at the beginning of this week, seeing the situation they were in, the HBOS board said, 'Look we need to talk to Lloyds TSB.' They decided they would do that on a commercial basis."

The Chancellor said the takeover was a "commercial decision" and the government had enabled it to go ahead by lifting competition rules for this one deal. He said: "That was infinitely better than the alternative of HBOS being left to struggle on with maybe the government having to intervene. This was the best solution and, frankly, other than Alex Salmond, I do not know anyone else in this country who honestly believes we should have left matters to proceed as they were going."

And he added: "Alex Salmond is trying to make a case that absolutely everything was fine and it was only the fault of people in London who were the cause of this problem."

Iain Gray, the new Scottish Labour leader, joined the criticism of the First Minister. He dismissed Mr Salmond's argument that an independent Scottish government would have found up to £100 billion to bail out HBOS as "ridiculous".

Mr Gray said: "This is a fantasy figure plucked out of thin air. We are talking about over two times the annual budget of the Scottish Government.

"The First Minister is either economically illiterate or he is deliberately misleading the public. It is just not realistic to say the Scottish economy could provide the level of liquidity a global player like HBOS would have needed."

And he added: "Bailout funds were available to HBOS from the Bank of England, but as the Chancellor made clear again today there was no request for a line of credit from HBOS."

Tavish Scott, the Scottish Liberal Democrat leader, appealed to SNP and Labour politicians to "stop bickering".

In another development, independent MSP Margo MacDonald has written to the police, asking for an investigation into the possible spreading of misinformation about HBOS in the lead-up to the Lloyds takeover bid.

Ms MacDonald has written to Lothian and Borders Police asking the force to investigate whether competition laws were broken at that time.