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He was the kind of corporate financier who put the grand into City grandee.

But Sir Victor Blank is leaving the chair of Lloyds Banking Group to spend more time with his pension.

The company has just confirmed that he'll quit the post as soon as a successor has been identified, which means by the AGM next year.

That avoids the potential of a humiliating protest vote at the AGM in Glasgow next month.

What we don't know is whether UK Financial Investments, the government agency which controls £70bn of troubled bank shareholdings, would have backed him or not if he had decided to stay.

And its failure to back him when the media started reporting doubts about the shareholder vote may have been what made his mind up.

It had the look of the chairman being hung out to dry.

Big hurdles

Private and institutional shareholders from Lloyds TSB had good reason to feel unhappy at Blank's role in the takeover of Halifax Bank of Scotland.

As he was bluntly told by small-scale shareholders at last November's general meeting to approve the deal, they had invested in Lloyds TSB because it was conservative, and that's the way they wanted it to stay.

But the biggest institutional investor, the government, with 43% of Lloyds Banking Group, had reason to be grateful to Sir Victor for taking HBOS over when he did. That avoided full nationalisation.

Indeed, the deal was done between Blank and the prime minister last September, when HBOS was heading towards collapse.

Having taken the Lloyds TSB chair in 2006, Blank had held informal, pre-crisis chats with HBOS about a merger, but they knew their joint clout would face big hurdles at the Competition Commission.

With crisis looming fast, Gordon Brown told Blank the rules would be waived, and objections overruled, as duly happened.

Saying nothing

As chief executive Eric Daniels subsequently told the Treasury Select Committee, the Lloyds TSB due diligence on HBOS fell far short of desirable.

And as the 2008 results were yet to show, the Bank of Scotland corporate division was to contribute £7bn of red ink to the overall £11bn loss.

We found out this month that the corporate impairments are expected to increase by 50% this year, which was when the pressure on Sir Victor was ramped up.

He continued to stress, however, that "in the medium term, it remains a unique, value-enhancing opportunity".

The deal may have been a disaster for Lloyds TSB shareholders, but it was a relief for Gordon Brown.

And yet, as shareholder anger at Blank warmed up this month, where was the government on Blank's future? Saying nothing.

Until that is, his decision to stand down was announced on Sunday.

Find people

Less than an hour later, UKFI said it "supports his re-election in the context of its wider support for the Lloyds board, strategy, and executive team led by Eric Daniels".

It then "notes" his decision to step down before the next AGM.

That may give some pause for thought for other senior bank executives who have to look over their shoulder to a majority shareholder in Downing Street.

Will they get political support when they need it, or only after they announce they're quitting?

And who takes over from Blank? Well, it hasn't been that easy for the banks and the government to find people willing to sit on part-publicly-owned boards.

Two were found for Lloyds, announced in February, but three are still being sought for the Royal Bank of Scotland, seven months after the bail-out.

Pressure's on

One clue to the replacement chairman may be the decision by the Lloyds Banking Group on Sunday morning to appoint soon-to-be senior independent director Lord Leitch of Oakley to the role of deputy chairman.

On behalf of the rest of the board, he commented that they had unanimously wanted Blank to stay on as chairman, and that while his decision to stand down was a personal one, they respect and understand it.

He was Sandy Leitch and formerly chief executive of Allied Dunbar and then Zurich.

He was born in Dunfermline, Fife, and lacks Sir Victor's grandness.

Those roots and that style may explain why he gets on rather well with Gordon Brown, and his advice on business has long been trusted in Downing Street; chairing the New Deal Task Force from 2000, with a review of skills training three years ago, and becoming a life peer in 2004.

According to the Financial Times, Lord Leitch was spotted entering the Treasury building on 7 May, the same day this month's trading statement did for Blank's future.

If he is on course to get the chairman's office at Lloyds Banking Group, Leitch may wish to be clear how much backing he can expect when the pressure's on.