Banks merger prompts jobs fears

Britain's biggest trade union Unite called on Lloyds to "end the speculation" on job security as fears mount that thousands of roles will be axed from the combined "superbank".

Lloyds said it now hoped to cut more than £1.5 billion - an extra £500 million on original estimates - from the combined cost base after its takeover of HBOS.

Both banks insisted the tie-up remained on track, despite speculation of potential rival bids from mystery suitors waiting in the wings.

In trading statements released by both banks on Monday, troubled bank 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 said there would "inevitably be some rationalisation of the combined workforce", but gave no details on the number of potential job losses or timescale.

There have been particular concerns in Scotland that overlap between the two banks would see the region hit hardest by the deal.

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."

A third potential bidder was also understood to be looking at HBOS, although again the party has not been named. Eric Daniels, Lloyds chief executive, told shareholders the bank was "not losing sleep" over the rumours. "We have heard nothing tangible whatsoever," he said.

If the deal gets the go-ahead by HBOS and Lloyds shareholders, it will create a banking behemoth with around 145,000 staff and 3,000 branches across the UK. But jobs and branches are thought to be under threat from the tie-up. The bulk of the cost savings earmarked by Lloyds will come from the retail banking businesses, where Lloyds aims to cut £790 million within three years, according to details set out by the group.