Tavish Scott, leader of the Liberal Democrats in Scotland has written to the Chancellor, demanding answers about the extent of the UK Government’s involvement with rival bids to the Lloyds takeover of HBOS.

In his letter, Mr Scott wrote:

“Economic experts at the Fraser of Allander Institute have forecast staggering job losses across Scotland and a serious recession. We know that the Lloyds takeover of HBOS could mean the loss of 20,000 jobs, predominantly in Scotland.

“Merger with Lloyds was a plan meant for a very different world. It was devised before the taxpayer stepped into UK banking with billions of pounds of investment.

“Devastating job losses, branch closures and an end to healthy competition do not represent value for taxpayers’ money. A rival bid might give a better option to shareholders, could keep HBOS independent and may go some way to limit the harm to customers that was highlighted by the Office of Fair Trading report.

“I was, therefore, disappointed that reports of a Bank of China bid didn’t linger for long. The Government needs to take this opportunity to be clear that you are not deterring or dispersing new bids for HBOS even before they can be formally pitched.

“I have spoken to senior banking figures from Scotland over the last three weeks and I have been left feeling that that the Prime Minister is pulling every string to stop any other rival bid. Journalists are being briefed, names are being released, bids are being discouraged.

“I write to ask you to explain what action, if any, the Treasury took to encourage and support competition to the Lloyds takeover option. I write to seek confirmation that you did not stand in the way of any bid from the Bank of China. And I write, once again, to urge you to give a level playing field to rival bids.”