Shares in HBOS slid more than 10 per cent this morning as wary investors continue to question the prospect of the forced takeover of the embattled mortgage bank by Lloyds TSB.

With two days to go before a shareholder vote on the controversial deal, Lloyds TSB shares also fell more than 9 per cent as investors questioned the merits of owning the combined bank.

Lloyds TSB shares dropped 9.8 per cent to 149.6 while HBOS stock was off 10.8 per cent at 77.1p.

Jim Spowart, who founded Intelligent Finance and Standard Life Bank, today conceded defeat in his attempt to broker an alternative deal to the proposed takeover by Lloyds.

Mr Spowart blamed government ministers and a series of leaks for ending his campaign to stop the Lloyds TSB takeover going through.

The share price fall means that HBOS is trading at about 15.5 per cent below the price offered by Lloyds TSB, a discount that has haunted the deal since it was first brokered two months ago by Gordon Brown, the Treasury and UK regulators.

Shareholders in Lloyds TSB will vote at a special meeting in Glasgow on Wednesday on whether to approve the takeover, which has been pushed ahead amid growing worries that HBOS was poised to collapse.

HBOS shareholders will have to wait until December 12 to vote on the takeover.

Lloyds TSB is offering investors 0.605 of its shares for every HBOS share held. In the face of the market turbulence and a discount on HBOS shares of more than 50 per cent, the bank reduced the amount on offer from 0.83 shares last month.

As part of the agreed deal, HBOS will raise £11.5 billion from the Government and existing investors through a combination of preference and ordinary shares, while Lloyds TSB will raise £5.5 billion.

The takeover, part of a government intervention to prop up failing banks, has attracted controversy.

It will create a dominant force in retail and corporate banking and in all other normal circumstances would have been blocked on competition grounds.

Some shareholders in HBOS, Britain's biggest mortgage lender, have argued that the bank has a future as a standalone group and does not need to be rescued.

Some investors in Lloyds TSB have also expressed reservations amid worries about the potential for bad loans in HBOS's mortgage book.

Sir Peter Burt and Sir George Mathewson, two Scottish former bank executives, have proposed taking control of HBOS and running as an independent bank.

Sir Peter wants to be chief executive with Sir George acting as chairman, although their interest so far has been dismissed by shareholders in both banks.

Unions are worried about planned job losses at the combined bank, to be called Lloyds Banking Group. No firm numbers on proposed cuts have been circulated but estimates run at between 20,000 and 40,000.

Unite, the banking union, plans to demonstrate outside the Lloyds TSB meeting on Wednesday. It said today: "The current climate of speculation about the future of the [combined] bank has resulted in a great deal of uncertainty and insecurity for Unite members."

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive