A bank that was rescued with £17bn in state handouts refused to open a "return to Normandy" account for D-Day veterans, on the grounds that it would be a profitless nuisance.

The Normandy Veterans Association asked Lloyds to set up an account for the "Overlord List" – an appeal in The Independent that raised £20,000 to take 500 ex-servicemen back to France on 6 June for the 65th anniversary of the Normandy landings.

The request, to a Bristol branch of Lloyds, was received enthusiastically. However, the NVA's secretary Peter Hodge was later told the bank's London headquarters would not approve what it deemed a "temporary" facility because the cash would be withdrawn before the summer and would therefore "provide no benefit" to Lloyds.

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The advertising executive Trevor Beattie, who has personally pledged to sponsor 30 veterans from the West Midlands after hearing of our appeal, accused Lloyds of showing "rank insensitivity". "We hear a lot from bankers about risk," he said. "We, as taxpayers and citizens, are suffering from the absurd risks banks took. And now this bank refuses to provide a simple, risk-free service for people who risked everything on our behalf. It beggars belief."

In a letter to the Bristol branch manager, copied to the Lloyds chairman Sir Victor Blank, Mr Beattie said: "Your blighted profession has just slipped another rung. As if banking had not soured its already crass reputation enough. Not happy with helping bring our economy to the brink of a financial abyss, it now seems that lending a hand to a group of proud octogenarians to whom we all (yes, even bankers) owe everything is beyond you. You are not fit to lace the boots of those we will be honouring in June. Sleep well."

Mr Hodge said the NVA asked Lloyds for a special account because it was anxious to make sure the cash and cheques were handled safely. He said he found the bank's reluctance impossible to comprehend, adding: "Their main point was that such an account would be difficult to organise and provide no benefit to Lloyds."

Last night, a spokeswoman for Lloyds TSB said: "We are extremely sorry for the upset and offence we caused Captain Peter Hodge. Better judgement and more flexibility should have been exercised by us."

She added that "in order to express our deep regret", the bank would pay £700 to sponsor two veterans to make the return trip to Normandy. However, the apology came too late for the NVA. Mr Hodge, 67, has instead set up an account with HSBC, which said it was "honoured and delighted" to help with the fundraising campaign.