It was born 12 years before the Act of Union, has survived Jacobite rebellions, several wars, famines, recessions and the great depression. But yesterday after shareholders voted overwhelmingly in favour of its takeover by Lloyds TSB, the Bank of Scotland effectively ceased to exist.

Anxious weeks and months now lie ahead for the 17,000 HBOS and 7,000 Lloyds TSB workers in Scotland. Rob MacGregor, of the Unite union, said: “We are obviously concerned about redundancies ... assurances on jobs have been few and far between.”

Lord Stevenson of Coddenham, the outgoing HBOS chairman, admitted at yesterday's meeting of shareholders in Birmingham that he had received “no specific guarantees” on jobs and staff terms and conditions, although he added that Lloyds would approach the takeover “carefully and considerately”.

He also apologised to shareholders for the bank's plight which led to the £11.5billion taxpayer bailout and takeover by the rival Lloyds TSB, saying that he was “neither happy nor proud” as chairman.

Lord Stevenson was also criticised for accepting a lower offer for the business than initially agreed, but he said this was down to the dire situation and weak bargaining position the business found itself in as wholesale markets shut down. “In the extreme volatility we found ourselves in, we had to negotiate the best deal we could ... it is as simple as that.”

Yesterday's vote came as shares in HBOS and other banks dropped by about a fifth after HBOS issued a dismal trading statement showing the speed at which it was having to devalue its assets was accelerating because of the recession.

Several employees demanded to know what assurances the board had received from Lloyds TSB about their jobs and whether Eric Daniels, chief executive of Lloyds TSB, could be trusted both to run a good business and to look after employees.

Lord Stevenson said: “I don't really know the guy. He strikes me as a very understated guy, very effective and very straight. I think he is fundamentally a decent guy.”

HBOS will now become part of the Lloyds Banking Group. It will be 20 per cent owned by HBOS shareholders, 36.5 per cent by Lloyds TSB shareholders, and 43.5 per cent owned by the Government. Though it has effectively ceased to exist as a business it will continue as a brand name under the new superbank.

Sir Peter Burt, the Bank of Scotland chief executive who negotiated the merger with Halifax and tried to prevent the Lloyds takeover, said: “It's a very sad end to an old song. All credit to Lloyds for taking the opportunity and I hope for the employees that the job losses are not as bad as feared.”

Lord Stevenson said the bank's problems had been caused by the sudden drying up of wholesale money-lending for the first time since 1914. The bank had borrowed heavily in these markets in order to finance significant expansion of its lending to companies.

But in August last year HBOS had been unable to borrow money for anything longer than three months, a problem which the bank had managed to overcome until this September when Lehman Brothers in New York collapsed and only 24-hour loans could be secured. Collapsing property prices in the US had caused investors to sell HBOS shares because of its large exposure to UK property, he said. Lord Stevenson insisted that the board had looked at every possible solution, including remaining independent and had eventually concluded that a merger with Lloyds TSB was the only available option.

Lloyds TSB is now preparing to run a fine-tooth comb over HBOS's assets and named Chris Wiscarson as the man in charge of integrating the two banks.

Next week, the bank will name those in charge of merging individual divisions. The Times understands that Martin Akers, the head of wholesale banking at Lloyds TSB, is a leading candidate to manage the integration of its corporate assets with Bank of Scotland, part of HBOS.

Yesterday's approval of the merger, personally brokered by Gordon Brown in September, came after last month's “yes” vote by Lloyds TSB's investors. Together with his counterpart at HBOS, the chief operating officer, Philip Gore-Randall, Mr Wiscarson will preside over the creation of Lloyds Banking Group, which will become an instant colossus in British high street lending.

Lloyds, due formally to come into being on January 19, will become the third largest bank by market value behind HSBC and Royal Bank of Scotland, which owns NatWest. It will operate roughly 3,000 branches and have a combined staff of 143,000.

The new superbank, whose creation involved side-stepping competition law, will have 28 per cent of the mortgage lending market, 30 per cent of Britain's current account business and 23 per cent of its savings market.

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