While Lloyds dismissed claims that up to 40,000 jobs faced the axe as “ridiculous”, it refused to rule out compulsory redundancies.

The takeover will lead to cost savings of more than £1bn, Lloyds added.

Meanwhile the global markets were calmer after central banks pumped billions of dollars in extra funds.

The UK government also said it is “determined” to ensure the stability of the financial system and protect savers.

Gordon Brown pledged to “do everything to protect depositors in Britain, who need to have confidence in the banking system”.

The takeover by Lloyds TSB values shares in HBOS at 232p each.

By close of trade in London on Thursday, when the deal was announced, shares in HBOS closed up 17%, at 172p, while Lloyds shares shed 17.7% to 253p.

Turmoil

The deal comes as a crisis of confidence on global financial markets has wreaked havoc in recent days:

Gordon Brown said the decision was ‘right’

– A lack of funding has forced global central banks to pump billions of extra dollars into money markets
Russia’s main stock markets have been suspended for two days in a bid to prevent a meltdown after steep falls in share prices
– Banks around the world have admitted they could lose millions after the collapse of US investment bank Lehman Brothers
– The Federal Reserve rescued AIG with an $85bn (£48bn) package amid fears the group, once the world’s largest insurer, could collapse
– Bank of America bought investment bank Merrill Lynch in a $50bn deal earlier this week, another sign of the upheaval of the financial sector
– Meanwhile, the UK’s economic picture remain glum, with latest figures showing mortgage lending slumped again in August
– US President George W Bush sought to soothe nerves by announcing that authorities would closely monitor markets
– The UK’s Financial Services Authority has announced steps to restrict short-selling of shares

Deal welcomed

Effectively the buy-out of HBOS is a rescue deal after its shares plummeted recently amid concerns over the firm’s future.

Under the terms of the deal – which must be agreed by shareholders – HBOS shareholders will receive 0.83 Lloyds shares for every HBOS share.

LLOYDS vs HBOS
Branches – Lloyds 1,900; HBOS 1,100
Customers – Lloyds 16 million; HBOS 22 million
Employees – Lloyds 70,000; HBOS 72,000
Savings – Lloyds is the UK’s fourth largest savings bank; HBOS is the market leader
Retail savings balance – Lloyds £65bn; HBOS £139bn

“This will be a unique opportunity to accelerate and extend our strategy and create the UK’s leading financial services group,” said Lloyds chairman Sir Victor Blank.

Lloyds chief executive Eric Daniels said “You have the largest savings bank, you have the largest current account provider, you have two terrific distribution networks.”

According to the deal agreement “significant cost savings can be made by combining the networks and back offices of Lloyds TSB and HBOS”.

Under the cost saving plan retail branches will be cut, while head office posts, human resources and finance and legal departments will also face cuts.

Analysts have suggested that up to 40,000 jobs could go, but banking consultant Jonathan Charley said HBOS was under pressure not to make such deep cuts.

He estimated that 10% of the combined workforce, or about 14,000 posts, could be cut.

Competition fears

BBC business editor Robert Peston said the government had opted to push through the Lloyds TSB-HBOS tie-up after HBOS voiced concerns that depositors and lenders had begun to withdraw their credit from the bank.

Declan Curry goes through the main points of the deal

Earlier Chancellor Alistair Darling said the government would allow the HBOS-Lloyds TSB deal because financial stability “must trump” competition fears.

But he denied that the authorities had rushed through the transaction.

“It didn’t just suddenly happen,” he told the BBC.

City watchdog, the Financial Services Authority (FSA) welcomed the merger saying it would “enhance stability within financial markets and improve confidence among customers and investors in the UK financial sector”.

“I’m worried by banks merging. Too much money in one pot is dangerous.” Stephen, London

Send us your commentsConcerns about HBOS’s security were so great that even the prime minister was involved in pushing through the deal, our business editor said.

“There were growing concerns in the HBOS boardroom that a climate of fear was being created about its future that could have led to a funding crisis, or a Northern Rock-style run – on steroids,” he said.

Market leader

Meanwhile, Mr Daniels – who will take over the helm of the new firm – was keen to stress that the takeover had not been forced on HBOS.

“There shouldn’t be any impression this is a shotgun marriage or a forced marriage, this is something that’s been looked at for a good long while,” he said. This is the right transaction for HBOS and its shareholders

Dennis Stevenson, HBOS chairman

Lloyds added that the takeover was part of its strategy to build “the UK’s leading finance company”, adding that it also intends to increase the number of competitive mortgages on offer for first-time home buyers.

The creation of such a large bank, which will hold a third of the UK mortgage and savings market, would not normally be allowed under competition rules say analysts.

But the deal was backed by the government, using a special national interest clause, on the grounds that a collapse of HBOS would have had a disastrous impact on the UK.

However, Lloyds chairman Sir Victor Blank did say the Office of Fair Trading would look “very carefully” at the business if it discovered any market abuses in the future.

Scottish focus

The group also moved to allay fears that the takeover would mean a blow to Scotland where HBOS is currently based.

Lloyds said the new group would continue to use The Mound – HBOS’s corporate headquarters – in Scotland, continue to hold annual general meetings in Scotland and carry on printing Bank of Scotland notes.

“In addition the management’s focus is to keep jobs in Scotland,” it added.

HBOS chief Andy Hornby will remain with the company, but his role has not been decided.

“Against the backdrop of the very high levels of volatility our industry is experiencing, the combined group will be one of the strongest players in the UK financial services sector.

News reported by The BBC

The vote will take place as the shockwaves from the collapse of of the 158-year-old Wall Street giant Lehman Brothers reverberate worldwide.

Last month A&L sent a letter out to more than 560,000 shareholders urging them to support the deal.

A&L considers that its prospects as an independent entity are not good.

Merger plan

The bank’s shareholders will convene at Birmingham’s International Convention Centre later.

They are being offered one Santander share for three A&L shares as part of the planned takeover offer which was announced in mid-July.

If the deal takes place as planned this October, then A&L will be merged with Banco Santander’s existing UK subsidiary, Abbey.

This will create a much larger bank with 959 branches and 10% of the UK’s bank current accounts.

With the credit crisis wiping out most of A&L’s half-year profits and the continued high cost of securing funding in the wholesale markets, the bank’s board is keen to insulate itself against a worsening economic backdrop.

Its shares ended 6% lower on Monday after a series of dramatic developments on Wall Street hit confidence in the UK banking sector.

News reported by The BBC

The $900m deal – which gives UK-based Vodafone a 70% stake in the firm – has been attacked by opposition MPs for grossly undervaluing GT.

But communications minister Benjamin Aggrey-Ntim said it would enable Ghana to become a vibrant and competitive player in the telecoms market.

GT is Ghana’s third largest mobile phone firm with 1.4 million customers.

As well as mobile interests, Ghana Telecom has a monopoly over fixed-line services and employs 4,000 staff.

However, the company is unprofitable and has debts of $400m.

Looking ahead, Vodafone said it plans to boost Ghana Telecom’s share of the mobile market to 25% from its current 17% and invest $500m to expand network coverage.

There are 2.7 million mobile subscribers in Ghana, although overall mobile penetration per head of the population in the west African country remains low at 35%.

Rapid uptake in mobile use on the continent has attracted foreign firms.

Vodafone already owns half of Vodacom, the leading mobile business in South Africa, Tanzania, Lesotho and the Democratic Republic of Congo.

News reported by The BBC