The Herald can today reveal the full extent of the internal politics that have pitted the guardians of the club’s future against the financial institution that has now assumed day-to-day control over the crippling financial affairs in an effort to recoup their £30m.

Alastair Johnston, the new chairman, Martin Bain, the chief executive, and the rest of the Rangers board are steadfastly resistant to the brutal worst-case scenario outlined by the bank at the last board meeting. Unless a new owner can be found imminently -- and Dave King, the South Africa-based businessman, has re-entered negotiations to assume control -- the bank will insist on administering drastic surgery to the ailing club at the end of the season. Put simply, every first-team asset would be sold to the highest bidder and no contracts sanctioned unless King, or other potential investors, can agree a price with Lloyds and stave off the threat of administration.

Sources at Ibrox have confirmed that only a takeover within the next six months will prevent a mass exodus. Walter Smith, whose contract expires in January, will steadfastly refuse to preside over such a debilitating cull, which would include the transfers of such established pillars as Madjid Bougherra, Allan McGregor, Pedro Mendes and Steven Davis.

Ally McCoist and Kenny McDowall, widely regarded as favourites to succeed the 61-year-old when he leaves -- which could occur as soon as a new owner is ensconced -- have serious misgivings about staying on in such extreme circumstances. It would mean appointing a new and inevitably cost-effective coaching team on the proviso there would be no budget for transfer fees or significant Bosman salaries.

Smith took the extraordinary decision to put his head above the parapet after Saturday’s 1-1 draw against Hibernian at Ibrox to reveal the extent of bank interference since Sir David Murray was instructed to stand down as chairman and effectively waive the value of his shareholding.

It was a bold strategy, but one the 61-year-old was prepared to take to bring transparency amid the thickening fog of uncertainty engulfing the stricken club.

He has wearied of the internal politics at play but will continue to defend the honour and integrity of the club he has served twice as manager. The board have continually railed against the bank’s budgeting policy for next season onwards, which -- to the astonishment of the Ibrox hierarchy -- was inclusive of sustained revenue from European football and a continuation of current season-ticket uptake.

It was pointed out that, with a weakened team and increasingly complex qualification path, participation in the Champions League would be improbable and, consequently, supporters would be disinclined to watch a watered-down team.

Bain, in particular, has fought against a devastating dilution of the club’s value and credibility, which is why the club preserved Champions League ticket prices in the midst of a recession.

Last night, one source confirmed the severity of Rangers’ plight. “Effectively, if the bank’s plan is implemented in full, there will be no money available for players in the next transfer window, in the summer or, frankly, for the foreseeable future,” he said. “Anybody sold in these windows would immediately be replaced by inexperienced players from the youth team.

“Moving forward, no contracts that are due to expire will be renewed and no money would be available for strengthening.”

Rangers’ board were stunned by Lloyds’ thinly disguised threat to place Rangers in administration unless they signed up to a radical overhaul that will be overseen by Donald Muir. The appointment of the turnaround specialist, or company doctor, as a non-executive director signalled the most significant decision taken yet by the bank. While there is an understanding of his new remit at Rangers, there is also a tacit unwillingness to endorse it.

Lloyds, which is about to embark on a £23bn fund-raising project to prevent the government lifting its stake from 43% to 60%, are acutely aware of the wider implications of pushing such an institution towards administration.

None the less, they have intensified their bid to reclaim their £30m borrowed by Rangers and rectify the wider financial concerns affecting Murray International.

Their squeeze on Rangers began last January, when a mandate was submitted to prominent agents alerting clubs to the availability of all first-team players.

In the end, only a £3m bid from Birmingham City for Kris Boyd was forthcoming and, ultimately, rejected by the player.

In March, the bank conducted an audit of Rangers’ accounts, undertaken by PricewaterhouseCoopers, that enforced the £1m sale of Barry Ferguson and the removal of 10 fringe players from the wage bill.

This, according to many within the club, is merely the tip of the iceberg. It is understood there was a reluctance to sanction another one-year, pay-as-you-play contract for David Weir and, indeed, The Herald can reveal the captain actually started the season without having signed a contract.