John McFarlane, the former chief executive of ANZ Bank, emerged yesterday as a front-runner to succeed Sir Tom McKillop as chairman of Royal Bank of Scotland (RBS).

Mr McFarlane was named by the bank as one of three new non-executive directors to strengthen the board in the wake of its heavy credit-crunch losses. Stephen Hester, the chief executive of British Land, and Art Ryan, former chairman of Prudential Financial, the American insurance group, were also named as non-executives.

Responding to criticism that the board was not independent enough, RBS announced the departures from the board of Larry Fish and Bud Koch, both former executives.

Sir Tom paid tribute to the three new board members, saying: “Their experience in financial services will be of great benefit to RBS, given the increasingly diversified and international nature of our powerful banking franchises.”

Mr McFarlane, 61, a Scot with dual British and Australian citizenship, is a career banker who won plaudits in Australia for turning around ANZ during his decade-long tenure. He retired last year.

Institutional investors, still smarting after having to inject £12billion of fresh capital into RBS, are keen to see changes in the governance at Britain's second-biggest bank. One applauded the moves and said that he expected further announcements: “This is a great start. They have shown they are grasping the nettle. I don't think this is the end game.”

Although Sir Tom has given no indication of leaving before his term expires in 2011, his departure would be seen as a key step in a slow-motion reshuffle that eventually would lead to the departure of Sir Fred Goodwin, the chief executive, as well.

The RBS board is short of credible internal candidates for the chairmanship. Peter Sutherland, chairman of BP, and Bob Scott, the former chief executive of insurer CGNU (now Aviva), are both ruled out because they are close to serving the maximum nine years allowed on the board.

Investors are keen for a new chairman to oversee the search and appointment of a new chief executive. Sir Fred is seen as too skilful to lose while he sets about integrating assets acquired as part of the ill-fated ABN Amro purchase last year.

Advisers to RBS emphasised that no decisions had been made. “These appointments give us a lot more options,” one RBS source said.

One option would be for Mr McFarlane to take on the senior independent director role at RBS from Mr Scott, who is said to be keen to stand down soon, and later to go on to be chairman. Another would be for Mr McFarlane to go straight to the chairmanship and for Mr Hester to take on the senior independent director role. Some observers said that Mr Hester, who helped to to stabilise Abbey National before selling it to Banco Santander, was a potential successor to Sir Fred.

“It will be no bad thing for Sir Fred to know that Stephen Hester is peering over his shoulder,” one source said.

Mr Hester announced that he was standing down as deputy chairman of Northern Rock to take on the RBS role on October 1. He was appointed by ministers when the Rock was nationalised in February.

RBS sounded out its top ten shareholders ahead of yesterday's announcement and received a generally favourable response. Guy Jubb, head of corporate governance at Standard Life Investments, which owns more than 3 per cent of RBS, said: “These changes are very welcome and demonstrate that the RBS board is getting to grips with its governance.”

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