He is giving up his contractual entitlement to the money when he steps down once the merger deal with Lloyds TSB has been completed.

And a spokesman said group chairman, Lord Dennis Stevenson, is also giving up his contractual entitlement in the interests of the company.

Mr Hornby would have been entitled to a years salary of £940,000 plus a cash bonus of £700.000.

Lord Stevenson would have got £710,000.

The terms of the takeover deal between Lloyds TSB and HBOS have been re-negotiated, despite assurances weeks ago they would remain unchanged.

HBOS shareholders will now get 0.605 Lloyds shares for every HBOS share, against the original offer of 0.833.

Halifax boss, Andy Hornby, announced he would step down once the takeover has been completed, scheduled for the beginning of next year.

When news of the takeover deal first broke, the two banking giants revealed Mr Hornby would resign as chief executive but would take on a new role.



Today (Monday) HBOS announced its shares would be sold to Lloyds TSB at a lower rate than originally agreed, following last week's plummeting share price turmoil.

And the government is to inject £17 billion into the merged 'super-giant' bank.

HBOS will raise £11.5 billion from taxpayers, made up of £8.5 billion in ordinary shares and £3 billion in preference shares, while Lloyds TSB is to get £5.5 billion.

It means taxpayers will own 40 per cent of the new merged bank in the part-nationalisation plans.

The Treasury investment in the two banks, as well as Royal Bank of Scotland, forms part of the government bail-out announced last week

Lloyds TSB and Barclays are also set to ask for taxpayer cash in return for shares in order to stay afloat amid global turmoil.

The huge bailout will leave foreign-owned HSBC as the UK's only major, fully independent High Street bank. The Government already controls two significant mortgage lenders, Northern Rock and Bradford & Bingley.
The dramatic moves come as hopes were raised that plunging markets might be about to stage a fightback.

Early futures index figures suggested that US stocks will open higher today after EU leaders signed up to to Gordon Brown's blueprint for recovery.

The announcement, after an emergency summit of eurozone countries in Paris yesterday, was seen as a significant personal victory for the Prime Minister.

Opposition from senior figures such as German Chancellor Angela Merkel had stymied joint progress before. But further market dives appeared to focus minds, and the group pledged to guarantee lending between banks, and step in with state funding to prevent major financial institutions collapsing.

The US came on board with similar action over the weekend, after Mr Brown and Chancellor Alistair Darling set out their proposals last week.

Mr Brown - who, in a break with precedent, attended the Paris summit despite Britain not being in the single currency - praised the eurozone measures as the best way of restoring "confidence" to the shattered international system.

"The difficulty that we have got at the moment is in restoring confidence in the banking system. What is missing is confidence itself," he said.

Your Say: At 39, Hornby was too young to be made bank chief - click to read

'Government must be a rock of stability,' says Gordon Brown - click here to read full story