By Steve Bargeton, political editor

SCOTLAND BRACED itself for massive job losses in the financial sector after banking giants HBOS and Lloyds TSB late last night finalised details of a merger.

Lloyds TSB was refusing to comment on reports that a deal structured on its takeover of HBOS had been struck.

However, it is understood the deal, which will create a bank which will hold about a third of the UK’s savings and mortgage market, was struck at a price of 232p per HBOS share.

The deal is to be formally announced this morning.

When talk of a merger emerged earlier yesterday First Minister Alex Salmond angrily hit out at the “spivs and speculators” he blamed for targeting HBOS and forcing it into a “shotgun marriage” while one trade union warned the effect on jobs could be “catastrophic.”

The two banks employ more than 20,000 people in retail banking in Scotland with competing branches in many towns and cities. HBOS has 320 Scottish branches and Lloyds 187.

Both HBOS—itself a merger of the Halifax and the Bank of Scotland—and Lloyds TSB—a merger of Lloyds with the Trustee Savings Bank—have their headquarters in Scotland.

Mr Salmond cancelled a trip this weekend to the Ryder Cup in the US to hold meetings with bank bosses.

Last night he made it clear he would be fighting for Scottish jobs and to keep the headquarters of the new bank in Scotland.

“Both banks have group HQs in Scotland,” he said. “There is going to be a huge job to keep key elements of decision making within the Scottish economy. I have spoken to the most senior officials in both banks and I made that case.

“My experience of financial sector mergers is that once key decisions are made, others are made early. Therefore these representations have to be made at an early stage. In terms of the Scottish economy, these are very, very important times.”

The First Minister, who used to work as an economist, said he had no criticism of HBOS and Lloyds TSB, but said any merger between the two should be based on measured discussion, not a “shotgun marriage” driven by unwarranted speculation. He accused financial regulators the Financial Services Authority of leaving HBOS vulnerable to speculative attack by failing to act despite finding the banking giant was properly funded and had a good capital ratio.

“I am very angry that we can have a situation where a bank can be forced into a merger by basically a bunch of short-selling spivs and speculators in the financial markets,” he said.

“We should not have situations where well capitalised, properly funded financial institutions are subject to incredible speculative attack, and that drives them into decision making which they otherwise might not have done.

“You have got to put the hems on that sort of activity, otherwise we will have a succession of companies going through the same process. All financial regulators have got to wake up to where we are at the present moment.”

And he warned that unless the activities of money market speculators was curtailed, any institution could be under threat.

The Unite union said the merger could have a “catastrophic” effect on jobs.

The union warned it would not accept any compulsory redundancies and urged both banking groups to take a “socially responsible approach.”

Scottish Labour finance spokesman Andy Kerr called for a summit on Scotland’s financial sector.

“For the past decade the success of the Scottish economy has been founded on growth in the financial sector.

“Its continued success is an issue that is too important for party politics. We propose an urgent summit involving business leaders, trade unions and financial experts to examine whether we in Scotland are doing everything possible to protect vital jobs.”

Liberal Democrats’ Scottish leader, Tavish Scott, said, “The enormous short-term financial pressures have understandably led to these talks.

“But customers need to know that banking regulators are on their side because a merger of these two will mean less competition.”

For the Tories, Derek Brownlee said, “We want to see Scotland maintain a strong and stable presence in the global financial sector.

“There will be concerns from employees, customers and shareholders. This is the time for responsible politicians to seek to address these concerns, not fan them.”