In normal times a merger of Lloyds TSB and HBOS would be unthinkable.

Hammering together the number four and number five banks in Britain would create a superbank with totally unacceptable market power in areas like mortgages, savings and current accounts.

As one senior banker put it today, John Fingleton will be beside himself over this. Mr Fingleton is head of the Office of Fair Trading, which has spent the last few years desperately trying to inject more competition into retail banking, not allowing less.

In normal times, rival banks would be kicking up an almighty stink at this threat to their market positions. In normal times, ministers would hardly be giving their blessing to a deal that looks likely to trigger tens of thousands of job losses.

But of course these are not normal times.

Financial stability is more important than anything to the economy and to business and consumer confidence. With Northern Rock fresh in the mind, regulators and ministers are determined never to allow things to get to the point where depositors are queuing round the block to pull out their savings.

With the terms of the deal not yet fully agreed, it is too early to come to any verdict about what it means for shareholders. But it seems likely the HBOS investors will salvage something from the wreckage with talk of an offer valuing their shares at a premium to yesterday's close.

If that is the case, it is imperative that no public funds are being put at risk. If HBOS shareholders are to walk away with anything, it's important that taxpayers are not left on the hook.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax