Britain’s biggest savings bank will be rescued from the brink of collapse this morning in a deal intended to stave off financial catastrophe but likely to put tens of thousands out of work.

As Halifax Bank of Scotland finalised an emergency takeover by Lloyds TSB, two of Wall Street’s most powerful investment banks were scrambling to survive. Shares in Morgan Stanley and Goldman Sachs, once the stormtroopers of global capitalism, tumbled,prompting fears for their future.

One shell-shocked senior banker in London said that there was no future left for the traditional investment bank. “The world is on the brink. The market is puking all over us. There’s no capital left in the world,” he said.

On a day of undisguised market panic, the US Government was forced to nationalise AIG, America’s largest insurer; the price of gold soared as panicked investors rushed to find safe havens; others sought shelter by buying US government bonds at levels not seen since Pearl Harbor in 1941; and Gordon Brown personally intervened to enable the fire sale of HBOS to Lloyds to create Britain’s biggest bank. The deal could cost as many as 40,000 jobs across Lloyds and HBOS branches, call centres and head offices, according to one estimate. The new bank will be called Lloyds Halifax, raising concerns north of the Border that it will lose its Scottish identity.

In a measure of how close policymakers believe Britain may have come to financial anarchy, ministers were preparing to invoke the national interest to allow them to waive normal competition rules and push the deal through quickly.

Lloyds agreed to pay 232p a share to HBOS shareholders in new Lloyds shares. The deal values HBOS at £12 billion, less than a quarter of its value 18 months ago. Shares in HBOS, which owns Halifax, Bank of Scotland and Birmingham Midshires, had crashed by more than half to 88p in early trading before reports of the rescue deal sent them soaring again. They ended at 147p, down 19 per cent on the day. According to sources close to the deal, no public money will be injected into the new bank.

Official figures yesterday revealed the biggest monthly leap in unemployment since 1992, with 1.7 million Britons now out of work.

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