Andy Hornby, the HBOS chief executive, has been bombarded by e-mails from thousands of anxious employees worried about their jobs in the wake of the rescue takeover by Lloyds TSB.

Mr Hornby revealed that he had received a flood of anxious messages as he wrote to staff insisting that surrendering to Lloyds was the right thing to do.

In an e-mail to all 70,000 staff on Sunday night, Mr Hornby confirmed that inevitably there would be job reductions but that it was too early to quantify them. “However, the majority of HBOS colleagues are likely to stay with the enlarged group, reflecting the sheer scale of the business,” he wrote.

Analysts have estimated that between 20,000 and 40,000 jobs could go across the two banks, which together employ more than 140,000 people, almost all in the UK.

“Rest assured that we will do everything we can to end the uncertainty for you as soon as we can,” Mr Hornby wrote, noting that the uncertainty could be prolonged because the integration would take two to three years.

Staff in the Yorkshire town of Halifax are particularly concerned, fearing that they may be especially vulnerable because of Lloyds TSB's promise to keep job losses in Scotland to a minimum. There was no similar assurance for English and Welsh staff.

Linda Riordan, MP for Halifax, where 6,000 HBOS staff work, said that it would be unacceptable if English jobs were to be sacrificed in favour of Scottish ones.

Mr Hornby said that the HBOS board, in accepting the offer from Lloyds, was concerned that the plunge in its share price before the deal was raising concerns among its customers. He said: “The simple truth is that I - and the rest of the HBOS board - were simply not prepared to take any risks with our great business.”

He said that it had been an extraordinarily difficult few days. “It's certainly been the most tiring and emotional week in my working life, and I know [from the literally thousands of e-mails that I have received from you all] that you have been through just the same degree of worry and anxiety.”

Shares in Lloyds and HBOS fell back yesterday, partly amid concern about the wisdom of the £12 billion deal. Lloyds fell 10p to 275p and HBOS was down 13p at 209p.

Although the combination will give Lloyds a dominant market position in British personal banking, analysts are worried that it will make it more dependent on wholesale funding.

JPMorgan Securities downgraded Lloyds to “underweight” from “neutral”, arguing that the deal was not in the best interests of Lloyds shareholders. “Whilst the combined entity should have significant pricing power when the deal completes, based on our calculations we see the company severely capital-constrained,” it said.

In Scotland, where the two banks employ 16,000 people, politicians and business leaders met to express their concerns. Alex Salmond, the First Minister, emphasised the importance of HBOS and its subsidiary Bank of Scotland to Scottish life.

“In every sense, you can say the Bank of Scotland, HBOS, is hardwired to Scottish society and therefore there is understandable concern with the proposed merger/takeover,” he said.

Rallying the troops

‘It's certainly been the most tiring and emotional week in my working life and I know . . . that you have been through just the same degree of worry and anxiety’

‘We agreed to be purchased by Lloyds TSB because it is the right thing to do. We had reached a point where the dramatic movements in our share price [caused by the unprecedented market context] were raising concerns amongst our customers’

‘The simple truth is that I – and the rest of the HBOS Board – were simply not prepared to take any risks with our great business’

‘It is of course the case that the merger will inevitably lead to some job reductions. However, the majority of HBOS colleagues are likely to stay with the enlarged group, reflecting the sheer scale of our business’

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