The Scottish knights opposing the takeover of HBOS by Lloyds TSB abandoned their campaign yesterday, blaming the Government for impeding an alternative rescue.

Sir Peter Burt and Sir George Mathewson took a final swipe at the HBOS directors, accusing them of apathy and a lack of transparency, but admitted that there was no hope for their plans. The Chancellor’s statement on Tuesday, underlining the Government’s commitment to the deal and giving warning that public support for any alternative might be on inferior terms, was the final straw.

“The Government’s statement has made it crystal clear they do not want and are not prepared to facilitate HBOS remaining independent,” their statement said. “Accordingly, Sir Peter and Sir George reluctantly decided to discontinue their campaign.”

The two men lobbied for HBOS to reject the Lloyds offer and hire them as chairman and chief executive, dismissing Lord Stevenson of Codenham and Andy Hornby, but their campaign failed to attract serious support.

Lloyds shareholders voted overwhelmingly this week in favour of the takeover. HBOS shareholders are to vote on the deal next month.

The takeover would create a giant in British personal financial services, but is expected to lead to tens of thousands of job losses. The knights revealed that they had received offers of £500 million of fresh capital from “private sources” to help to keep HBOS independent. They also applauded Lloyds for seizing a great opportunity. “It may well be the deal of the century,” they said.

Six weeks ago the Government waived normal competition rules, allowing a combination of two banks that would never be allowed in more benign times.

HBOS shares closed at 73.3p, up 1.3p. The Government is likely to be obliged to take up the entire £8.5 billion placing of shares, because the underwritten issue price is 113.6p. It will also buy £3 billion of preference shares.

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