SIR VICTOR BLANK is to step down as chairman of Lloyds Banking Group to appease shareholders angered at the disastrous takeover of rival HBOS.

The move could be announced as early as today.

It would serve to relieve the pressure on chief executive Eric Daniels, who has also been under fire from investors since he admitted to a committee of MPs that Lloyds did not have enough time conduct proper due diligence before its takeover of HBOS, which he billed as the “deal of a lifetime” when it was struck last September.

Blank, 66, told the UK Financial Investments (UKFI), which handles the state’s holdings in banks, of his decision yesterday and officials were supportive.

He will to stay on until the next annual general meeting while the bank looks for a replacement. The process to look for his successor will begin immediately.

The move comes amid increasing pressure from institutional investors who saw billions of pounds of value destroyed in the wake of the HBOS takeover.

Blank’s decision avoids a potentially contentious vote at Lloyds annual meeting next month, where he was going to be up for re-election.

Institutional investors have been in talks with UKFI in recent weeks about a potential management change at the top of the bank.

News of his departure comes at a sensitive time for Lloyds. The bank is finalising details of scheme to insure about £260 billion in bad loans with taxpayer funds.

A former partner at Clifford Chance, the solicitor, who took over as chairman of Lloyds TSB in 2006, Blank has argued tirelessly that the deal creating Britain’s biggest banking group should be judged over the longer term.

But the worsening economy, which pushed more homeowners into arrears and businesses into administration, meant that losses continued to pile up.

Within months of buying HBOS, Lloyds recorded £10.8 billion in losses due to HBOS’s bad loans. Deteriorating finances forced Lloyds into state hands with the government taking a 43% stake.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive