Bank targets £1.5bn in cost savings

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Lloyds said it now hoped to find an extra £500 million from the combined cost base after its takeover of HBOS, fuelling concerns of swingeing jobs cuts.

Britain's biggest trade union Unite urged the banks to "end the speculation" over jobs and offer clarity to worried staff.

Both banks confirmed their commitment to the deal, despite speculation of potential rival bids from mystery suitors waiting in the wings.

In trading statements also released by both banks, troubled HBOS revealed a further £2.72 billion hit from the credit crunch, while Lloyds said it had seen a "substantial reduction" in profits since the start of the year.

Lloyds is hoping to deliver annual cost savings of more than £1.5 billion by the end of 2011, compared with its previous estimate that it would be able to save around £1 billion or 10% of the combined group's cost base. It said there would "inevitably be some rationalisation of the combined workforce", but gave no details on the impact on jobs.

Concerns are growing in Scotland that the merger could see thousands of roles axed in the region.

Derek Simpson, Unite joint general secretary, said: "It is completely unacceptable for the banks to continue fuelling speculation while leaving their worried staff in the dark. It is now time to start thinking about the human consequences of this takeover."

The deal also came under pressure over the weekend after it emerged that Scottish Secretary Jim Murphy had talks with Jim Spowart, the founder of HBOS-owned Intelligent Finance, about the possibility of a group putting together an alternative offer for HBOS.

A third potential bidder is also understood to be looking at HBOS, although again the party has not been named.