Stevenson warned of the implications of shareholders rejecting the deal. A standalone HBOS would need more money and the terms of the Government's bailout could not be taken for granted. The bottom line is nationalisation.

But even that does not hugely concern Sir Peter Burt, a former colleague and now his nemesis, who insists the bank can survive independently and that, if nationalised, the Government would own less of HBOS than it will of RBS.

Along with former RBS chairman Sir George Mathewson, Burt responded to Stevenson's letter by saying the extra sum required was quite modest and he defied suggestions the Government wants the merger to go ahead. On the contrary, he says, the Government has made it clear that shareholders will decide.

Well, to a point. Publicly, they may be saying that. But without the current bailout and agreed merger with Lloyds TSB there is a great danger that HBOS will collapse entirely because – as stated in this column previously – nationalisation is not what the Government wants, as it knows it will be left with the bank for a considerable time and the burden on the taxpayer will be immense.

As an added reminder of this, John Stewart, outgoing chief executive of National Australia Bank, told me last week that those banks taking bailout packages could develop a dependency on Government money.

While Burt and Mathewson argue that it is Lloyds that is the weaker of the two banks, other evidence points to the underlying weakness in HBOS's exposure to the wholesale money markets, which are now suffering a severe drought.

And those who lay all the blame for Bank of Scotland's woes on the Halifax should note that when they merged, Halifax was 85% self-funded while Bank of Scotland's self-support was just 53% of total funds.

Burt and Mathewson show few signs of giving up, and the web-based campaign to garner support appears to have produced a healthy response. But there are other difficulties facing the Edinburgh Two.

A renegotiated deal would cast doubt on the early repayment of Government preference shares – HBOS is too weak to do it alone – and so a return to paying cash dividends to ordinary shareholders would be off the agenda. The coupon, or interest, on those preference shares may also be higher than the 12% currently agreed. There is no certainty of any protection for pre-emptive rights – the right of shareholders to acquire any new shares.

So if shareholders of one or both companies reject the deal, HBOS will either collapse or be nationalised and the latter – which the former HBOS executive Jim Spowart also sees as an option to be considered – is fraught with dangers. Shareholders stand to lose everything whereas the Lloyds TSB merger gives them 20% of the enlarged company.

Those fighting to save HBOS warn of massive job losses. But look what happened to Northern Rock which has lost 2,000 jobs and is much smaller than HBOS. Look at Royal Bank of Scotland, soon to be Government-owned and already axing 3,000 jobs, with more to come.

Sources tell me that, if nationalised, the Government would close parts of HBOS, starting with those bits that are exposed to the highest lending concerns, and that is the corporate bank. It has registered most of the bank's losses – some £2bn so far. And where is it based? Edinburgh.

There is another practical problem for the Edinburgh Two: timing. Burt and Mathewson want to call an EGM so they can be voted in to replace Stevenson and his chief executive, Andy Hornby. Company law would allow HBOS 21 days to contact shareholders and a further 28 days to call a meeting. If it had been instigated on Friday, a total of 49 days – which Lloyds HBOS would no doubt stick to – would take us to January 2, or three weeks after HBOS shareholders vote on the Lloyds TSB deal. Burt and Mathewson appear to have run out of time.

In the meantime, we await the Spowart-backed mystery bidder. Back in September this newspaper reported tentative interest from Spanish bank BBVA and two US banks, but none has made a move. Bank of China now emerges as a possible bidder. Amid all the talk of nationalisation, no one is surely serious about putting HBOS under the control of the Chinese government.