There was growing anger last night after it emerged that the man many believe is responsible for the collapse of HBOS is to be paid £60,000 a month to oversee the cost-cutting drive which will see thousands of jobs axed.

Andy Hornby, the fallen boss of HBOS, has been told there will be no permanent job for him but has been put in charge of the process of deciding which posts will be cut when the bank is taken over by Lloyds TSB.

Many have personally blamed the former Bristolian for the crisis and senior politicians have hit out at his involvement in the rescue operation.

Yesterday it emerged as many as 20,000 people could lose their livelihoods when the two financial institutions join forces to create what will become the country's biggest bank.

It was also revealed that £1.5 billion worth of savings will be made over the next year, £500 million more than originally predicted.

Hundreds of posts are likely to be sacrificed in the West where an estimated 14,000 people are employed by both banks.

High Street branches are likely to bear the brunt of the purge but there also fears that the Cheltenham and Gloucester, which employs more than 1,300 at its HQ, could also disappear for good.

Bristol City supporter Hornby is 41 and attended Clifton Prep School where his father was headmaster. He became the youngest ever boss of a major British bank. But his high-risk strategies are now being widely blamed for the near collapse of HBOS.

Vince Cable, Treasury spokesman for the Liberal Democrats, said: "This is just mind boggling. This is rewards-for-failure on a mega-scale. HBOS only acquired this deeply flawed business under Hornby's leadership. Now people are losing their jobs and homes as a result of mistakes made by him. What is he being paid for?"

Educated at Oxford and Harvard, Mr Hornby made his name at Asda where he held a variety of roles including managing director of the company's successful clothing business George.

Under the terms of his departure from HBOS he has turned down a "golden goodbye" of nearly £1 million but will still walk away from the debacle with a pension worth £2.4 million.

It is believed Mr Hornby has been taken on for his inside knowledge of HBOS and will be asked to pinpoint departments that are overstaffed.

Meanwhile, the RBS's designated chief executive Stephen Hester vowed to "re-earn the confidence" of shareholders as RBS unveiled more trading woes in detailing its £20bn Government-backed bail-out.

RBS reported an eight per cent drop in earnings in the first nine months of its year and signalled the potential for a full-year loss – the first in its history as a public company.