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Roll up, roll up – see the bankers under fire, poke 'em with a stick and make 'em jump!

There was a distinct whiff of the amphitheatre as the CEOS from Royal Bank of Scotland, Lloyds Banking Group and Northern Rock faced down the Treasury Select Committee on Tuesday as MPs fired off questions about bonuses, business practices and how much “hoodwinking” had gone on!

That last question was aimed particularly at Eric Daniels, group chief executive of Lloyds Banking Group, who was asked several times whether the Treasury shared with Lloyds management that it had been considering instructing HBOS to stop taking new business while it was in negotiations about a possible merger.

Daniels replies were coy. "It was very clear that HBOS was a very troubled company,” he admitted. "I was in the middle of negotiations [when there was consideration of stopping HBOS taking new business]. The triparite made clear they were highly concerned about the future of HBOS. I do not have a specific recollection of the closure to new business [option] but it was clear the tripartite was incredibly concerned about the future of HBOS. It was clear that were we not to go forward [with the purchase of HBOS]the tripartite would take other steps."

He added that while he “cannot recall” whether the Government told his bank that it was considering closing down HBOS, he did not: “believe the business was worth nothing. I don't believe anyone was hoodwinked. It will prove to be a good deal for our shareholders and the wider banking system."

Meanwhile Royal Bank of Scotland's CEO Stephen Hester claimed that his group is more than two thirds of the way through tidying its balance sheet. "We are well ahead of where I thought we might be," he said. "That gives me encouragement to believe we can hit all the ambitious targets we put out for the recovery of RBS. I don't think we will make more losses like have already been made.

He added that RBS wants to be able to exit the government's Asset Protection Scheme within the next three years without having used it. "We regard it as unlikely for RBS to call upon the scheme,” he said. “It is there as sort of a rainy day scheme whereas when it was first conceived it looked likely that we would need it and I hope, and it's our ambition, within the next two or three years we will be able to exit the scheme altogether without ever having used it.

In a more embarrassing exchange, Hester had to admit that even his parents believed that he was overpaid, although he insisted that his package is currently worthless as he has agreed to take no cash in the first year. That said, if all goes to plan, it could be worth almost £10 million over three years. He admitted: "If you ask my mother and father about my pay, they'd say it was too high, as well, so some people close to me have that view of bankers."

Meanwhiile Northern Rock's CEO was able to claim that the amount of capital going into Northern Rock to restore its fortunes was £1.4 billion at the start of 2010, less than half of the £3 billion originally set aside for use by the government.

CEO Gary Hoffman advised that Northern Rock will report a loss for 2009 but it will be substantially smaller than 2008's loss of £1.4 billion and that the results would prove “encouraging”. That said, he added that it would be up to the government to decide on the timing of the return of the bank to the private sector."We work closely with the government on it. They have set no deadline to me, all they asked me to do is to make sure the return to taxpayers is done at some time," he said. “There have been some informal discussions, there have been no formal discussions."