Alistair Darling yesterday attempted to defuse a growing row over the allegedly punitive terms of the government’s bailout of three high street banks, when aides insisted there was no 'blanket ban on dividends for five years'.

The chancellor’s clarification came amid mounting pressure from bankers and investors, who claimed Mr Darling had insisted on such onerous terms for the taxpayer-funded bail-out and that it was deterring ordinary investors from taking up new shares.

The chancellor reacted furiously to what he believed was an attempt by bank executives to renegotiate the terms of the deal, agreed between the Treasury and the banks only on Saturday, to the detriment of the taxpayer.

Financial Times