17th century bank coming to an end as merger goes ahead

A merger of HBOS and Lloyds TSB could lead to as many as 40,000 UK job losses and 1,000 branch closures, rival bankers estimated, because of the huge overlap between the two banks.

Unite, the trade union, rushed out a plea for no compulsory redundancies today in the face of what could be the biggest private sector cull in living memory.

HBOS employs 72,000 people while Lloyds has 70,000, in both cases almost entirely in the UK. In mergers of such similarly positioned organisations, as many as one third of the combined workforce can lose their jobs.

The potential job cuts emerged as new figures showed that UK unemployment has risen to a nine-year high of 1.72 million after increasing by 81,000 in August. At the same time, the number of people claiming jobless benefits rose by 32,500 - the highest rate since 1992.

Shareholders in Lloyds TSB have overwhelmingly backed the bank's merger with the ailing HBOS group after a stormy meeting which saw large institutions comprehensively out-vote smaller investors who were unhappy over the deal.

Nearly 96% of Lloyds TSB shareholders voted to endorse the deal, paving the way for its agreed merger with HBOS early next year.

But small shareholders - mostly elderly, some travelling from as far as Devon to Glasgow to make their points - assailed chairman Victor Blank with a series of questions about the controversial deal in which Lloyds will raise £5.5bn to boost its balance sheet and swallow its rival.

The event in the cavernous Scottish Exhibition and Conference Centre on the banks of the Clyde was supposed to last only two hours but overshot hugely as the executives were quizzed on the wisdom of the deal, whether Lloyds risked getting too big like Citigroup and even why shareholders had not been given free parking vouchers for the meeting.