About 40 per cent of people in Britain will be customers of the new superbank formed by today's merger - many of whom could end up paying higher mortgage rates and interest charges.

Both Lloyds TSB and HBOS are already giants on the high street and joining the two will give the new bank a startling 23 million customers - 28 per cent of the UK mortgage market and 35 per cent of all current accounts.

The merged bank will also have more than 16 per cent of the UK savings market, 25 per cent of small business banking and extensive credit card, loan and insurance operations, giving it a hugely dominant position in virtually every aspect of the banking sector.

In normal circumstances, such dominance would have attracted an inquiry by the Competition Commission - which blocked an earlier attempt by Lloyds TSB to take over Abbey for similar reasons - but Prime Minister Gordon Brown, desperate to secure his own position by halting the current financial turmoil, has already indicated that he will use the Government's powers to push through today's deal.

For consumers, the danger is that the loss of competition in the mortgage and savings market will ultimately lead to higher interest rates and less generous mortgage deals. Although regulators will be instructed to monitor the merged bank's activity to ensure that it does not abuse its power, analysts are predicting that consumers will eventually pay more.

Louise Cumming, a mortgage expert at personal finance website MoneySupermarket.com, said: "Consumers have every right to be worried. The merged company will be under pressure to make a profit to justify the tie-up and customers will lose out."

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