London - A potentially giant banking merger loomed in Britain Wednesday as top mortgage lender HBOS confirmed it was in "advanced talks" with Lloyds TSB, the country's fourth-biggest bank.
Confirmation of the merger talks, coming after days of HBOS shares being buffeted in the aftermath of the collapse of US bank Lehman Brothers, was met with surprise in London's financial district.
Analysts raised competition issues and said the move smacked of panic, as it emerged that the government and the Financial Services Authority (FSA) were backing the merger talks amid concerns over a possible run on HBOS - or Halifax Bank of Scotland.