* Martin Scicluna to join as chairman designate on Nov 1
* Company dismisses concerns over his time at Lloyds
* Scicluna to be paid 475,000 pounds a year as chairman (Recasts with director comments at shareholders' meeting)
By James Davey
LONDON, July 11 (Reuters) - Sainsbury's, the British grocer that has agreed to buy rival Asda, has defended its new chairman, dismissing a shareholder's suggestion that he might be tainted by a failed takeover deal during his time at Lloyds Banking Group.
Britain's second largest supermarket group said on Wednesday Martin Scicluna would join its board as chairman-designate on Nov. 1 and succeed David Tyler as non-executive chairman in March 2019 or soon after. Tyler has held the role since 2009.
Scicluna is currently the chairman of RSA Insurance and property firm Great Portland Estates. His previous roles include being a non-executive director and chair of the audit committee at Lloyds Banking Group.
He was at Lloyds when the bank bought struggling peer HBOS during the financial crisis in 2008.
The government-brokered takeover, which saved HBOS from a state bailout, valued the bank at around 5.9 billion pounds ($7.8 billion) and wiped billions off Lloyds' market value. Lloyds itself then had to be rescued with a 20.5 billion-pound bailout in 2009.
Scicluna's time at Lloyds prompted one private shareholder at Sainsbury's annual general meeting in central London to question his suitability to lead the retailer's board and its 7.3 billion pounds takeover of Walmart-owned Asda.
"My concern at the moment is a lack of diligence in 2008 by a number of individuals. I don't want to have a similar thing occurring in 2019 when we merge with Asda," said Ralph Eschwege.
Susan Rice, Sainsbury's senior independent director who led the search for the firm's new chairman, told investors his concern was unfounded.
"He (Scicluna) came on to that board (Lloyds) probably days after the terms of the (HBOS) deal had been arranged," she said.
"He was certainly on the board during that period. That was a very complicated period and the coming together of Lloyds and HBOS couldn't be more different than the transaction that we're looking at just now.
"I personally see absolutely no relation or overlap there."
Rice, who was managing director of Lloyds Banking Group Scotland at the same time Scicluna was at the group, said Sainsbury's had done "extensive due diligence" on every stage of Scicluna's career.
"He shares the values that we all share here at Sainsbury's. I think with his experience and with who he is, he will be a very positive force for this transaction," she said.
In April, Sainsbury's agreed to buy Asda, Britain's No. 3 grocery player, a combination that will overtake Tesco as Britain's biggest supermarket chain.
The deal is being assessed by Britain's regulator, the Competition and Markets Authority (CMA).
The CMA's probe is expected to be lengthy and Sainsbury's does not anticipate the deal being concluded until the second half of 2019.
On appointment, Scicluna's pay will be 237,500 pounds a year as chairman designate and 475,000 a year as chairman.
Shares in Sainsbury's, up 36 percent this year on the back of the Asda deal, were down 0.1 percent at 329.4 pence at 1532 GMT, valuing the business at 7.2 billion pounds.
$1 = 0.7543 pounds Editing by Jason Neely and Mark Potter