Eric Daniels, chief executive of Lloyds TSB, signalled yesterday that he wanted to complete the all-share rescue deal of HBOS as quickly as possible – even though he had renegotiated the terms.

Daniels said the large amount of fresh capital being raised by HBOS had meant that 'we had to relook at the terms'. 'The capital...had a cost to it,' he told analysts.

HBOS is raising £8.5bn in fresh equity and £3bn in preference shares and Lloyds will also raise £5.5bn including £1bn in preference shares, with the bulk, if not all, of the money, likely to come from the government.

Lloyds and HBOS investors have the right to “claw back” the new shares if they want them. But without a clawback, the government would hold 43.5% of the new Lloyds-HBOS superbank, with HBOS investors holding 20% and Lloyds shareholders holding 36.5%.

Financial Times