The allegations are likely to prove embarrassing for government ministers.
An HBOS employee who warned the bank about its risky business model before the credit crunch pushed the firm into near-collapse lost his job as a consequence, MPs heard yesterday.
The allegation came at a Treasury Select Committee meeting, in which former executives at HBOS and RBS were questioned about their actions in the financial crisis.
Embarrassingly for the government, Sir James Crosby, the man who allegedly sacked ex-HBOS head of regulatory risk Paul Moore, has been an adviser to both prime minister Gordon Brown and chancellor of the exchequer Alistair Darling and has since been appointed in an executive position at the City regulator.
Both RBS and HBOS have been accused of running a high-risk corporate strategy in the boom years prior to the onset of the credit crunch, pursuing aggressive expansion and buying up complex financial instruments to boost profits and bonuses for staff. With the beginning of the crisis in 2007, the banks found it much harder to secure loans in order to pay for this expansion - and many of the instruments were massively devalued, putting their balance sheets under strain.
So acute were the revenue concerns that both banks looked at real risk of collapsing in 2008, as investors lost confidence and the firms' share prices dropped. However, the government stepped in by launching a rescue plan in October, spending £37 billion to part nationalise RBS, HBOS and Lloyds TSB.
In written evidence presented to the MPs' committee, Mr Moore said: "I realised the bank was moving too fast and I raised those challenges very strongly at board level… I told the board they ought to slow down but was prevented from having this properly minuted by the chief financial officer.
"I told them that their sales culture was significantly out of balance with their systems and controls."
