Anger as chiefs at HBOS get payouts

The revelation fuelled the growing row over the pay received by bankers who work for organisations that have been bailed out by the Government. Yesterday it was reported that the executives were given the money after the failing HBOS was rescued by a Lloyds TSB takeover.

The HBOS payments were made at the discretion of the bank, which has received 11bn of bailout funds from the taxpayer.

The bank is understood to have allowed share-based performance schemes to pay out in cash rather than shares. In other circumstances, share schemes might be expected to transfer into the shares of the new company.

The directors are believed to have received 10% of the value of the shares at the time they were granted. Some shares were granted at 11, but had sunk to less than 70p by the time the rescue takeover went through.

Yesterday, Tavish Scott, the Lib Dem leader in Scotland, said: "People will be outraged that failed bankers got taxpayer-funded payoffs when we were assured by the Government that no such payoffs would happen."

John Park, Labour's spokesman on the economy and skills, said: "Nobody objects to branch staff who have worked hard all year being rewarded for their efforts, but a bonus should be a reward for exceptional performance and no senior executive should be rewarded for failure or simply for leaving the company."

The growing fury over large payouts for bankers whose institutions have been bailed out by taxpayers has led to speculation that the Government may be forced to take action.

Yesterday it was reported that Peter Cummings, the executive who was head of corporate banking at HBOS, had held the bank to his contractual terms. He was entitled to one year's salary. In 2007 he earned 600,000 before the 1.6m he took in bonuses.

HBOS declined to comment.