HBOS chief: "I am convinced we have done the right thing"

THE chief executive of HBOS broke his silence last night to tell The Scotsman that "the vast majority" of Scottish jobs would be saved after the takeover of his bank, which he said would create "a real monster powerhouse" north of the Border.

Andy Hornby spoke out on the day the First Minister called an emergency summit of the country's business leaders. Alex Salmond said he would fight to ensure the global headquarters of the superbank would be in Scotland and promised to put pressure on Lloyds TSB at a meeting today in order to protect national interests.

However, one leading economist warned that Mr Salmond's plans were likely to fall flat – and he claimed that putting too much political pressure on the bank could discourage investment in Scotland.

Questions were still being asked over the probity of the 12.2 billion takeover deal. The Scotsman understands two separate investigations are taking place into alleged insider trading and delays in making an announcement to the Stock Exchange. Meanwhile, the FTSE fell back into the red yesterday after its record-breaking Friday, as investors awaited more details of the US government's 380 billion bail-out of banks' bad debts.

Mr Hornby, whose position in the new superbank is yet to be determined, insisted the "Bank of Scotland brand is going to be absolutely to the forefront" of its operations. He said: "When you think of the scale of the Scottish business going forward, it will be even bigger than the current Scottish operations.

"Lloyds themselves have got a decent-sized Scottish operation, so it will be a real monster powerhouse in Scotland, with The Mound as the central area."

The one-time "boy wonder" of the banking industry said he was "absolutely convinced that this is the right deal for HBOS to be part of a group which will be one of the largest and strongest institutions in the European banking industry, let alone just the UK banking industry".

And he insisted that while Eric Daniels, the chief executive of Lloyds TSB, has said it would take three years to determine the final number of job losses, "the vast majority of colleagues will stay, because of the sheer scale of the combined businesses".

The Scotsman has also seen an e-mail which Mr Hornby wrote to his staff on Sunday night. In it, he admitted that the week of the takeover had been "the most tiring and emotional week in my working life".

He also stressed that he had "done the right thing", that the new institution would be a "financial powerhouse" and that HBOS shareholders would share in the benefits.

On the question of jobs, he went on: "It is, of course, the case that the merger will inevitably lead to some job reductions. However, the majority of HBOS colleagues are likely to stay with the enlarged group, reflecting the sheer scale of our business. Moreover, for most colleagues, the impact of the merger is unlikely to be immediate, as integration will take at least two to three years to complete."

Meanwhile, Mr Salmond yesterday brought together politicians and business leaders to ensure Scotland would get the "best possible deal" in the wake of the proposed takeover.

After the Edinburgh meeting, which he co-chaired with Lesley Sawers, the chief executive of the Scottish Council for Development and Industry, the First Minister vowed to fight to have the headquarters of the new bank located in Scotland.

Mr Salmond denied it was too late to try to persuade Lloyds TSB to base the new, merged organisation in Scotland, or at least to have important decision-making in Edinburgh.

"The key decisions have not yet been taken," he said. "Therefore, we have a full opportunity to represent a Scottish view, a united Scottish view, in terms of seeking to defend jobs and decision-making and headquarters functions."

He said he had been given hope by the fact that Archie Kane, the chief executive of Scottish Widows, part of the Lloyds TSB group, would be looking at the new arrangements because of his strong Scottish links.

Mr Salmond's meeting at lunchtime today will not be with Sir Victor Blank, the chairman of Lloyds TSB, but the First Minister said he had spoken to him several times.

However, David Bell, professor of economics at Stirling University, said it would be "very difficult" to retain "any truly executive functions in Edinburgh", adding: "It'll be very difficult for the new bank to avoid taking key decisions in London."

He warned the Scottish Government to "tread carefully" and not to put excessive political pressure on the new bank as "the outcome could be that it ends up putting off other companies from investing in Scotland".

After yesterday's meeting with 58 business representatives, Mr Salmond insisted HBOS was "hardwired to not only the Scottish economy, but Scottish society" in the projects it supported across the country, including sport.

He refused to be drawn on questions of whether the merger and potential loss of a major bank from Scotland was necessary after the recovery of shares in banks, including HBOS, late last week following intervention by the US government.

He also refused to comment on concerns raised about suggestions there had been "an abuse of the market", with talks going on for six weeks between the two banks before they were officially declared.

In a show of political unity, Mr Salmond was joined yesterday by the leaders of the other major parties in Scotland – Labour's Iain Gray, the Conservatives' Annabel Goldie, Tavish Scott from the Liberal Democrats and Robin Harper for the Greens.

• Summit makes it clear takeover means much more than first thought

• Takeover hit by inquiry No2 after 200m 'insider dealing'

• Q & A: Nagging concerns over way deal was pulled together

• Interview: 'It'll be a monster-size power house in Scotland centred on the Mound'

• Rivals make a killing as nervous investors pull funds

• New rules crack down on short-selling 'spivs and speculators'