Leading shareholders in Lloyds Banking Group have predicted that Eric Daniels, the chief executive, will be forced out when the part-nationalised bank appoints a new chairman.

As UK Financial Investments (UKFI), which controls the Government’s stakes in banks, backed the Lloyds board, including Mr Daniels, yesterday, other shareholders were less supportive of the American.

One leading shareholder said: “Eric Daniels is there because there isn’t anybody else. If you were to present to shareholders an AN Other who was credible, they would probably go for it.”

He predicted that the appointment of a new chairman to replace Sir Victor Blank was likely to be followed by a boardroom clearout. “The new chairman will be very important. He will have a mandate to refresh. Most people believe it is the chief executive who will be refreshed first.”

Another leading Lloyds investor said that there was a “credibility issue” with the bank’s executive team. He said that communications with shareholders were a “struggle” and Lloyds was in denial about the depth of its financial problems.

“It may be that he [Mr Daniels] wields a big stick in the boardroom. But he’s never given me the impression that he is capable of the kind of micro-management that’s needed to make the takeover work,” one said.

Sir Victor was seen as the architect of last year’s troubled takeover by what was Lloyds TSB of HBOS, the mortgage lender. HBOS suffered a loss last year of £9.6 billion, higher than Lloyds had anticipated. Writedowns on HBOS’s mortgage book are expected to increase this year.

A Lloyds spokesman said: “The board is completely behind the senior management team. The team is very well positioned to deliver the synergies and significant benefits for shareholders in the medium term.”

Banking sources noted that UKFI had specifically backed Mr Daniels yesterday and said that shareholders had not lobbied for him to go. One said that the integration of Lloyds TSB and HBOS would be the biggest in UK banking history and Mr Daniels was the only executive with the “attitude and aptitude” for the task.

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