City shareholders have threatened a revolt against the board of Lloyds Banking Group (LBG) over yesterday's announcement of a £260bn bailout by the government.

Chairman Sir Victor Blank and chief executive Eric Daniels, who brokered last year's controversial merger of Lloyds TSB with the ailing HBOS, are now fighting for their survival after being forced to give the government a majority stake in the bank, a move both had resisted. Any departure would pile fresh pressure on Downing Street over rewards for failed bankers, following the controversy over Sir Fred Goodwin's huge pension from RBS.

Institutional shareholders will meet the pair this week, demanding answers over the acquisition of HBOS, which generated more than 80% of the bad loans yesterday placed in a government scheme to let banks insure themselves against future losses from toxic assets.

They are also questioning the terms of the deal under which Lloyds paid a larger-than-expected £15.6bn fee in return for insuring £260bn of toxic loans, and agreed to make £28bn available in new commercial and mortgage lending over two years.

A leading shareholder said Lloyds was "largely in this position because of the decision to buy HBOS", adding: "One or both [of Blank and Daniels] is going to come under quite a lot of pressure. That was a transaction they negotiated and recommended to shareholders, and it has turned out to be disastrous."

The departure of two such senior executives would risk further destabilising the bank. But MPs warned yesterday that lessons must be learnt from Goodwin's departure from RBS with a controversial £16m pension pot, demanding assurances that there would be no such payoffs for failure if heads rolled at Lloyds.

John McFall, chairman of the Treasury select committee, said banks in majority public ownership should "absolutely not" agree such payoffs. "I think it should presage a much closer involvement with UK Financial Investments [the body running part-nationalised banks]. The model of these banks has got to change fundamentally: it ain't business as usual."

Downing Street sources said it was "premature" to consider what restrictions might cover any boardroom departures. But delegates at yesterday's Scottish Labour conference in Dundee passed an emergency motion demanding the government pursue "every legal means" to ensure Goodwin and other bankers were not rewarded for "massive failure".

The chancellor, Alistair Darling, last night hailed the Lloyds deal as "another vital step in our efforts to clean up banks' balance sheets and give them the strength and confidence to increase their lending".

LBG will add another £6bn in mortgage lending to the £14bn recently promised by Northern Rock, plus £22bn of lending to businesses. McFall said his committee would scrutinise whether the lending actually does flow freely. However, the £6bn earmarked for mortgages represents less than half the total loans from British lenders during January alone, when offers were at a historic low.

The taxpayer will end up with a 65% share in what the Treasury minister Stephen Timms yesterday insisted would be a "strong and successful" bank. However, he failed to deny speculation that the taxpayer could lose up to £100bn on the deal, saying only that "precedents would suggest that the loss would be a great deal less than that".

Shadow chancellor George Osborne said the real test of the measure would be whether lending was resumed. Lib Dem spokesman Vince Cable called on the government to run the bank "in the public interest" because of the amount of taxpayers' money at risk.

Opposition MPs also warned that ministers will now be dragged directly into controversial lending decisions and held accountable for resulting job losses. Cable used a speech to the Lib Dem spring conference yesterday to suggest unemployment could eventually reach 4 million.