The taxpayer looks set to be a winner for once

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The merger was agreed (or announced) just three days after the collapse of Lehman Brothers. Little surprise, then, that a month later the UK Government had to come up with a £17 billion rescue package.

That came in the form of £13 billion worth of ordinary shares and £4 billion of preference shares paying a 12% coupon.

Today, those ordinary shares are worth £6.8 billion, meaning the taxpayer is sitting on a paper loss of £6.2 billion.

But the preference shares look as if they will be bought back just five months after they were issued. In fact, they will be paid back at a modest premium of 101% of their issue price. So the Treasury will have collected £240 million in preference dividends and the premium.

But in the meantime, the taxpayer has been called upon again. This time, the Treasury is underwriting £260 billion on the worst loans most of which came through Bank of Scotland.

It's a complex deal but if everything went pear-shaped, the taxpayer could end up footing the bill for £235 billion of dud assets.

In return, Lloyds is paying the Treasury £15.6 billion in new B shares. These will pay interest at 7%, which is much better than the 12% being paid on the preference shares. The Government can also convert them into ordinary share in the future.

That could raise its final stake in Lloyds just above 50%. In return for this asset-protection scheme, Lloyds has promised to increase its business and mortgage lending by £14 billion this year to try to free up the lending market.