Bank of China 'is secret HBOS suitor'

The BBC reported last night that the bank, one of the world's top ten financial institutions, was the mystery financing arm behind the proposal being put together by former HBOS executive Jim Spowart to try to counter a proposed takeover by Lloyds TSB.

If the purchase did succeed, it would represent the most ambitious overseas acquisition by a Chinese institution.

However, it was unclear last night whether the Chinese bank – in which the Royal Bank of Scotland Group has an 8.5 per cent stake – would definitely make an offer.

Mr Spowart declined to confirm the report. He told The Scotsman: "We took a decision early on to neither confirm or deny which bank was behind any potential bid. I've had journalists ask me about almost every major bank in the world to try to smoke out which one it is. On that basis, one of them is going to be right."

He added: "We have not even told the Treasury yet the name of our backer."

Shane O'Riordain, a spokesman for HBOS, said: "We have a policy of not discussing market speculation. We have a recommended bid on the table from Lloyds TSB."

The speculation came on the day when HBOS appeared to be fighting back against efforts by Scotland's banking knights – Sir George Mathewson, a former chief executive of RBS, and Sir Peter Burt, a former chief executive of Bank of Scotland – to try to keep HBOS independent.

Amid fears over the loss of jobs and influence in Scotland, they are openly canvassing for an emergency general meeting to sack Lord Stevenson, HBOS's chairman, and Andy Hornby, its chief executive, who are backing the Lloyds TSB deal. To do this, they would require 10 per cent of shareholders to agree to a meeting and votes from 50 per cent of all the shareholders.

In a letter replying to Sir George and Sir Peter, published in full yesterday, Lord Stevenson dismissed their attack.

He wrote: "The board has unanimously concluded that your letter does not form the basis for any further discussion between us."

He attacked them for their lack of detail in their proposal to keep HBOS independent. "You do not describe any specific aspect whatsoever of this plan. Nor do you set out a value proposition for shareholders, or address how your idea would provide certainty or stability for HBOS and its shareholders and customers. You provide no assurance as regards the terms on which HMG (HM Government] would be prepared to recapitalise HBOS standalone under your leadership."

HBOS appeared to have backing from its major shareholders, including Standard Life's investment director, Ewan Sterling, who pointed out the Lloyds TSB bid remained the only one on the table. ABN Amro, which is part of the RBS Group, and Credit Suisse also came out in favour of the Lloyds deal, as did Jane Coffey, head of equities at Royal London, who said: "Lloyds looks like a good deal for both sides."

However, the campaign to keep HBOS independent continued yesterday, with Alex Salmond, the First Minister, criticising the HBOS board.

He said: "I think the difficulty many people would have with the current leadership of HBOS is they are obviously committed to the merger with Lloyds TSB, effectively come what may."

Tavish Scott, the leader of the Liberal Democrats in Scotland, and Vince Cable, the party's Treasury spokesman, have written to the HBOS board demanding a meeting. Mr Scott said that, so far, there had been "little response" from senior HBOS staff on alternative bids.

"Duo risk derailing only deal on the table" - click here to read Terry Murden's Business Blog

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