The potential merger of Lloyds TSB with HBOS could have negative effects for consumers, it has been suggested.
According to the Centre for Economics and Business Research, an acquisition would remove many of the secured loans offered by HBOS from the market.
Senior economist at the consultancy Charles Davis stated: "In terms of mortgage lending HBOS are the leading mortgage lender in the UK. You are removing one of the market leaders who have contributed to keeping prices down and providing cheap credit to consumers."
Speculation about the possible merger has been rife since the middle of last month, when it was announced that Lloyds TSB wished to take over the struggling bank.
The chairs of both companies backed the move, with HBOS head Dennis Stevenson recommending that shareholders vote in favour.
Yesterday HBOS shares dropped by 14 per cent amid speculation that the deal would in fact not go ahead.
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