HBOS has played down the dispute with its pension fund trustees as mere sabre-rattling. But the trustees' decision to apply to the Court of Session to block the Lloyds TSB takeover raises the temperature. It is hard to see how the court cannot take the complaint seriously. In essence, a fund responsible for 79,000 people's retirement incomes is owed £3 billion to £5 billion by HBOS and the trustees say that the risk of members being short-changed could be increased by the Lloyds deal in its present form. A compromise looks tricky. Lloyds cannot make any concession that weakens the covenant offered to its own pension funds; the HBOS trustees cannot want to risk derailing the entire deal, however. Somebody needs to blink, and soon.

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