The banks have now announced plans to raise up to £17bn through the Government’s rescue scheme. Lloyds says it intends to raise £4.5bn from investors with the support of the Government, and will offer the Government preference shares worth £1bn.

HBOS, for its part, says it plans to raise £8.5bn from investors and will offer the Government preference shares worth £3bn.
 
As a result, both banks will be part-owned by the Government.
 
Under the terms of the merger, HBOS shareholders will receive 0.605 new shares for each HBOS share they own - down from the original offer of 0.833.

Both Lloyds TSB and HBOS have confirmed their commitment to the merger deal despite reports of a rival bid.

Jim Spowart, a Scottish businessman, is reported to be working with a European financial services company, whose identity is yet unknown.

Both banks also said that the market turmoil had reduced their earnings.

Lloyds TSB said third quarter profits at its wholesale and international division had been hit by a £270 million write-down on assets hit by global credit problems.

HBOS said write-downs and losses on bad debts for the first nine months of this year now stood at £5.2bn, up £2.7bn from the end of June.

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