Lloyds TSB’s shareholders today voted through the bank's rescue takeover of HBOS, owner of Halifax and Bank of Scotland, with 96 per cent of investors backing the deal.

A merger between the two banks, brokered by Gordon Brown, the Prime Minister, in September, will create a lender with 145,000 staff and 3,000 branches across the UK.

At today's meeting, shareholders also supported Lloyds TSB's plan to raise £5.5 billion to shore up its balance sheet, including £1 billion from the Treasury, which will buy preference shares in the bank. Until Lloyds TSB pays back the Government’s £1 billion investment, it will not be allowed to pay bonuses to its directors.

Shares in HBOS rose 12 per cent to 70.6p as the result of today's vote in Scotland emerged, but the bank's stock is still trading 10.9 per cent below the price Lloyds TSB is offering for the bank. Shares in Lloyds fell slightly by 1.4p to 129.8p this afternoon.

Yesterday, Alistair Darling gave warning that a rejection of the deal could prove costly to HBOS.

Mr Darling said access to the Government's proposed £37 billion bailout of the banking sector was not "automatic", a clear threat to the proposed rival bid from two senior Scottish bankers.

The Chancellor said there was "no automatic right of access to the recapitalisation scheme".

Sir Peter Burt and Sir George Mathewson suggested earlier this month that the Lloyds TSB deal should be rejected and HBOS should remain independent, take funds from the Government's bailout package and to be run by them.

Their approach has garnered some support in Scottish political circles but was deemed unlikely to succeed. The Financial Services Authority has indicated that, if the Lloyds TSB approach fails, HBOS might have to raise as much as £12 billion to stay in business.

While today's vote was widely expected to back a HBOS takeover, workers have staged demonstrations outside the Scottish Exhibition Centre where the meeting was held.

Unions have expressed concern about whether job cuts will be made to reach the £1.5 billion worth of proposed cost savings from the merger.

Derek Simpson, joint general secretary of Unite, the union, said: “Employees from HBOS and Lloyds deserve to have their concerns heard at the shareholders' meeting. Along with the loyal customers, employees of Lloyds and HBOS are the life-blood of these banks.

“The protesters will demand that Lloyds shareholders do not merely consider the financial rewards of a takeover of HBOS, but the wider social and employment implications.”

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