But yesterday SNP MSP Alex Neil described the payout due to Mr Hornby as “outrageous”.

He said: “It is very clear to me that he has presided over the downfall of HBOS. He might not be entirely to blame – it would be unfair to say that – but clearly he was the captain of a sinking ship as far as allowing it to be taken over in what is very clearly becoming a bad deal for HBOS.”

Mr Neil has now called on the bank’s major shareholders to “revolt” and ensure that Mr Hornby does not profit from the takeover. He said: “They must ensure that he does not hit the jackpot because of the proposed merger.

“That would be outrageous. It would be morally offensive to the employees losing their jobs, to the shareholders, to the customers and to the people of Scotland, giving what he has allowed to happen to this venerable institution.”

Mr Neil is now involved in setting up a meeting of senior Scottish bankers aimed at mounting a £6billion alternative bid for HBOS. He is also trying to find another bank to make an offer for Scotland’s oldest financial institution and ensure its headquarters are kept north of the Border.

He said: “I believe there is an outside possibility there is an institution somewhere in the world who’d be willing to mount a rival proposal which would be better for Scotland, better for shareholders and better for everybody.

“But it really is a long shot. I’m working with a number of people in the financial community and together we are on a fishing expedition to find if  anyone can come up with a better deal.”

Mr Neil added: “I don’t want to build up expectations, but I do believe it’s a shot worth trying. We need to find out if there is any possibility of a better way of running
HBOS in the future rather than as a subsidiary of Lloyds TSB.”

The Government forced HBOS into a deal with Lloyds just days after the collapse of US Investment bank Lehman Brothers, amid fears of another Northern Rock scenario.

Rumours about its finances, its plunging share price and the carnage in global markets had fatally undermined the City’s confidence in HBOS.

Thousands of HBOS workers in Scotland will lose their jobs when the takeover is completed. Unions met the management of both HBOS and Lloyds late last week and demanded there should be no compulsory redundancies

Last week Mr Hornby wrote an email to all 70,000 employees vowing to end the uncertainty as soon as he can.

He said: “The majority of HBOS colleagues are likely to stay with the enlarged group.

“Rest assured that we will do everything we can to end the uncertainty for you as soon as we can. It’s been the most tiring and emotional week in my working life, and I know that you have been through just the same degree of worry and anxiety.”

Yesterday HBOS declined to comment on Mr Hornby’s payout.

Meanwhile, Scottish Labour leader Iain Gray yesterday called on First Minister Alex Salmond to hold next week’s meeting of his Council of Economic Advisors in public before he presents his business case to Lloyds TSB over the HBOS merger.

Mr Gray said: “It is clear that questions and concerns about the Scottish economy, in general, and HBOS, in particular, must be on the agenda.

“As these matters are of such national interest and public concern I have asked the First Minister to strain every sinew on behalf of the Scottish people by allowing his own Council of Economic Advisers to speak in public about how they believe Scotland’s case is best advanced.”