Sir Fred Goodwin, chief executive of Royal Bank of Scotland (RBS), and chairman Sir Tom McKillop were under enormous pressure to leave this morning as part of the Government's £50 billion bailout plans after shares in the UK's second biggest bank fell 39 per cent yesterday over funding shortfall fears.

A spokesman for RBS declined to coment, but a source close to the company said later that there was no truth in rumours that the bank's board is discussing the possibility of forcing their resignation in the near future.

Sir Fred and Sir Tom are reported to be replaced by Stephen Hester, formerly of the Abbey, and Sir Philip Hampton, currently chairman of Sainsbury's, according to The Daily Telegraph this morning.

The emergence of an urgent need for capital had placed Sir Fred's and Sir Tom's positions under renewed pressure after the bank raised £12bn this year in the biggest rights issue in European history.

Sir Fred, nicknamed Fred the Shred after he cut 18,000 jobs following the takeover of NatWest, has also been criticised for paying too much for ABN Amro, the Dutch bank that was bought for £49bn at the top of the market last year.

RBS shares have plunged from 597p to 90p this year.

Stephen Hester is currently chief executive of British Land, a leading property company, which he joined in 2004.

For the previous 19 years, he was at Credit Suisse First Boston, holding various Investment banking roles until becoming chief financial officer in 1996, then global head of the fixed income division. He is a trustee of The Royal Botanic Gardens, Kew Foundation.

Sir Philip Hampton has deep experience of banking and was the finance director of Lloyds TSB until 2004.

Sir Fred was forced earlier this year to reassure investors that he remained the best man for the job as he unveiled first-half pre-tax losses of £691 million.

RBS is still attempting to sell its Churchill Insurance and Direct Line businesses, which it put up for sale in April.

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