During the past 72 hours, an extraordinary deal to combine Lloyds TSB and HBOS has been pushed through that will change the face of the British banking system.

The takeover is the second largest domestic banking acquisition on record behind the mega-deal in 1999 in which Royal Bank of Scotland swooped on NatWest.

According to Thomson Reuters, it is the 10th largest UK acquisition in any sector in history.

It will create a behemoth in financial services that will become the fourth-largest bank in the UK by market value, worth a combined £23.6 billion, based on yesterday's closing share price.

But it is highly questionable whether it should have been allowed to happen.

By its own admission, the Government, under the auspices of the Treasury and the Department for Business, have ridden a coach and horses through competition law to bring about this takeover.

The Government will have to change legislation to expand the grounds for its intervention on issues of public interest. That shows how badly the Prime Minister and his Chancellor wanted this deal.

Two years ago, the Office of Fair Trading would almost certainly have called for an enquiry on competition grounds.

The Government may have had no choice: the lessons of Lehman Brothers, Bear Stearns, Northern Rock and AIG might tell that intervention is a necessity.

But nationalising a failing institution is one thing. Deliberately forcing through the reshaping of the financial services sector without recourse to proper regulation is another.

Both sides were calling the deal a commercial one this morning. Shareholders, who will have a vote, may yet make a different call.

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