Treasury officials and regulators were in talks with banking chiefs yesterday to determine how much money they need under the Government's £50bn recapitalisation scheme.

An HBOS spokesman would not comment on reports that the bank will be requesting up to £10bn. RBS was said to be asking for £15bn, while Lloyds TSB and Barclays were reportedly seeking £7bn and £3bn, respectively. If the fundraising goes ahead on those terms, it would leave the Government with a 70 per cent stake in HBOS and 50 per cent in RBS.

This would create the potential for political appointments on the boards of both financial institutions.

The fundraising is intended to strengthen the capital positions of banks which ministers hope will free up inter-bank lending and comes as part of a £500m rescue plan announced last week.

A Government announcement was expected before the London Stock Exchange opened this morning and there was speculation yesterday that trading could be suspended so traders could absorb the details of the plan. Further speculation arose that Lloyds TSB would be seeking to renegotiate the terms of its HBOS takeover, although both banks were said to remain committed to the deal going ahead.

Treasury Minister Yvette Cooper confirmed yesterday that the Government was in talks with banks over the details of the programme.

The programme is expected to require banks to resume lending to small businesses and households and prevent the worst excesses of the bonus culture enjoyed by bankers.

Banks are likely to be asked to disclose predicted losses from exposure to the sub-prime mortgage market.

The scale of these losses will determine how much money they require from the state.

Ms Cooper said it was too early to say what conditions would come with the bail-out. The MP for Pontefract and Castleford added: "We'll set out the sorts of strings that will be attached on a case-by-case basis."

The money is expected to be raised by the Government underwriting an issue of ordinary shares, so those shares not taken up by existing investors will be owned by the state.

The shares will be placed in a new bank reconstruction fund that would hold the stock until market conditions improve.

The prospect of the Government taking controlling stakes in both HBOS and RBS caused concern among small shareholders.

Roger Lawson, of the UK Shareholders Association, told the Yorkshire Post: "The share price of RBS collapsed on Friday because of rumours of exactly that.

"If the stake is more than 50 per cent, effectively giving the Government control, the outlook would be bad because the Government has never shown it can run anything in a profitable or business-like way."

RBS shares fell more than 60 per cent last week. Both RBS and HBOS have lost more than three-quarters of their value this year.

The broader European bank index has halved this year as fears that more banks will fail have been stoked by the deepening financial crisis and prospect of recession.