Sir Victor Blank will step down as chairman of Lloyds Banking Group before June 2010, in what could be the first move towards restoring the bank's credibility among shareholders after its much-criticised takeover of HBOS.

Sir Victor decided to retire early in the face of a potential shareholder revolt against Lloyds management at next month's annual meeting and a lack of public support from UK Financial Investments, the body that runs the taxpayer's 43 per cent stake in the bank.