Tell investors the truth, HBOS rebels urge

REBEL HBOS shareholders are calling on the bank's non executive directors to ensure key figures are given to investors before any vote is taken on the Lloyds TSB take-over.

Alex von Sternberg, managing director of Euro-1B and former treasurer of Deutsche Bank, has written to the bank's eight non executive board members claiming that shareholders are being "kept in the dark on key funding information".

He wrote: "A question on many investors' minds is the extent of the HBOS funding requirement in wholesale markets over the next six months.

"There are reports of a figure exceeding £100 billion over the next year.

"In the interests of all shareholders HBOS management should publicise this number shortly if only to dispel any rumours leading to further market volatility."

It is the first time that the group's non executives have been brought into the controversy, on the premise that their responsibilities are to the shareholders and the group as a whole and not to the executive board.

Other than Sir Ronald Garrick, former chairman of Weir Group, and Tony Hobson, chairman of Northern Foods, they are not well known. They include Kate Nealon, a US lawyer, Karen Jones, formerly chief executive of Spirit Group, and Coline McConville, an Australian lawyer.

Mr Sternberg believes any assistance given to the combined group under the Bank of England's special liquidity scheme should also be made available to HBOS as a separate entity.

"Can you give an assurance", he writes, that "the market will be kept informed beyond the minimal regulatory requirements which have been shown to be insufficient in these turbulent times?"

Shares in HBOS continued to recover yesterday, gaining 22p or 14.8 per cent to 170.1p, while Lloyds TSB also gained 4.8 per cent to 262p. Under the paper-swap terms, the proposed bid would now value each HBOS share at 218p.

Meanwhile, Alex Salmond, the First Minister, has defended his call for the UK to follow Ireland's example by guaranteeing all savings held in British banks, despite the Irish government potentially falling foul of EU rules.

The move by the Irish has helped to propel money transferred across the Irish Sea from Scotland and the rest of the UK.

The European Commission may force the Irish government to withdraw its guarantee according to experts because of competition rules.

"It seems that the Irish government has given Ireland's biggest banks an unfair advantage over others, which is directly contrary to the European rules on state aid," said Anthony Woolich, partner at the business law firm LG.

The movement of money has also followed the decision by the nationalised bank Northern Rock to close many of its savings products. Products withdrawn to new customers from today include Silver Savings, Silver Savings 30, Business Reserve and a range of fixed-rate bonds. The changes followed the recent withdrawal of Northern Rock's fixed-rate access bond and its online e-saver product.

However, money has also come from other UK banks and among the Irish banks thought to be benefiting from UK savers' cash are Bank of Ireland, which also owns Bristol & West and backs the Post Office's financial products, Allied Irish Bank and Anglo Irish Bank.

Kevin Mountford, head of savings at moneysupermarket.com, said: "There is nervousness among consumers. They don't believe what the government is telling them. They are fearful and are looking for a flight to safety as opposed to rates."

However, Irish banks are not the only ones to be doing well. There have been reports of savers flocking to banks such as Lloyds TSB and Abbey, which is owned by Spanish giant Santander, as well as to the Treasury-backed National Savings and Investments. The British Bankers Association (BBA) called on people not to panic. A BBA spokeswoman said: "Consumers don't need to worry about the safety of their deposits as 96 per cent are covered under the current £35,000 deposit guarantee scheme."

US shares plunge on fears over bank bail-out

SHARES in the United States dropped sharply early last night amid nervousness that a $700 billion (£397 billion) rescue package to save American banks would be rejected in Congress.

The news came as European leaders, including Gordon Brown, the Prime Minister, gathered in Paris to discuss the crisis.

After the Senate agreed the rescue package with some revisions, the House of Representatives began debating it last night, having ditched the previous scheme last week.

Wall Street appeared less than confident that the House of Representatives would vote for the package and the Dow Jones index dropped 263 points, 2.4 per cent in early trade.

Mr Brown joined the leaders of Germany and Italy, Angela Merkel and Silvio Berlusconi, at a European summit in Paris on the crisis called by the French president, Nicolas Sarkozy. Others at the meeting included Jean-Claude Trichet, the head of the European Central Bank, and Jose Manuel Barroso, the president of the European Commission.

The aim of the meeting was to prepare the European Union members of the Group of Eight for broader talks on the financial crisis with leading industrialised nations.

Mr Brown is also reportedly planning to set up an emergency committee in the UK on similar lines to Cobra, the committee that deals with terrorist attacks and alerts. A spokesman for Mr Brown said: "It is right that the government looks at whether we have the right mechanisms in place to deal with global challenges."