The imminent job-shedding exercise at the superbank formed by the takeover of HBOS by Lloyds TSB is likely to recall the pre-privatisation rundown of the nationalised steel and coal-mining industries in the Eighties.

As shareholders voted for the deal in Birmingham yesterday 140,000 Lloyds TSB and HBOS employees were awaiting news of where the inevitable job cuts will fall.

The political pressures on ministers, as owners of 43.5 per cent owners of the new Lloyds Banking Group, to spare this or that group of bank workers in one or another marginal Labour constituency will be enormous as will be the demands from the bank's executives to be left alone to do what is necessary in order to restore the business back to profit-making health.

While Eric Daniels, to be chief executive of the new Lloyds Banking Group, has dismissed speculation that as many as 40,000 jobs will go, he has not yet put a figure on any cuts. Mr Daniels has talked of synergy savings of £1.5billion and on an industry rule of thumb that £60,000 of savings equals one job, it implies that as many as 25,000 or 17 per cent could go.

When the Royal Bank of Scotland bought NatWest in 2000, some 18,000 jobs from the combined workforce of 86,000 had gone after three years, a cut of 21 per cent. There was little overlap between the two banks' branch network, but NatWest was generally reckoned to be inefficient.

Both Lloyds and HBOS, however, are regarded as efficient, but there is considerable overlap between their combined strength of 3,000 branches in Britain, about 500 of which are in Scotland. Culling the network to eliminate duplication will be a high priority, a task which could well be completed within two years although Lloyds, because of the property downturn, will be left with a lot of property and unable to reap the full benefit of the rationalisation. Apprehension is highest in Scotland, where 24,000 or 16 per cent of the new superbank's employees work, and Yorkshire, where there are 14,000 workers, 9 per cent of the staff.

These areas are also at the epicentre of political tensions. Alistair Darling, the Chancellor and MP for Edinburgh South West, already faces Scottish National Party accusations that he undermined all efforts to find a less job-

damaging solution to the troubles of HBOS which, embodying the last surviving institution to be created by the pre-1707 independent Scotland's parliament, has emblematic status north of the Border.

In Yorkshire, there are high expectations of Yvette Cooper, MP for Pontefract & Castleford, Chief Secretary to the Treasury, and Mr Darling's deputy. Halifax retains several headquarters functions from the former Halifax Bank. It and the nearby towns of Copley and Pudsey are far more dependent for their livelihoods on banking than is Edinburgh.

Any suspicion that West Yorkshire is being sacrificed to appease the Scottish heartlands of Mr Darling

and Gordon Brown will be disastrous for Labour's prospects in the region. This is unknown political territory because fear at the implications of a deepening recession raises unpredictable emotions in worried people.

Faced with the apparently inexplicable disappearance of hitherto seemingly reliable stores of wealth in bank shares, people construct elaborate conspiracy explanations rather than face the more obvious fact that the board expanded too far and got caught by an unforeseeable financial storm.

One shareholder at yesterday's meeting, Vanessa Cameron, said: “We can't understand the rush to join Lloyds. Why couldn't the Government have put money into each bank individually? We just wonder if it was a way of getting rid of a Scottish bank to deny Alex Salmond [the First Minister] a bit of power when it comes to him wanting home rule for Scotland.”

With politicians trying to engage with such thinking and wanting to escape blame for job losses, trying to get a rationalisation programme past these political sensitivities will test the diplomatic skills of Mr Daniels and Sir Victor Blank, the Lloyds Group chairman-apparent, to the limit. And the resolution of the Government to adhere to its promise to remain distant from day-to-day banking management will be severely examined.

The reality of the likely pruning of branches plus the probability of amalgamations among the call and processing centres means that the pain will be felt in many parts of Britain. Lloyds, the bigger bank, has an extensive network of processing centres.

Though Sir Victor has said he wants to pursue a strong multibrand strategy, implying that HBOS's Bristol-based Clerical Medical life assurance business will remain separate from Lloyds' Scottish Widows, some clearing out of both company's back office operations appears inevitable.

One opportunity to soothe ruffled Scottish sensitivities may arise in fund management, where there appears to be little sense in maintaining two highly paid teams. HBOS's Insight operation is mainly London-based and folding it in Scottish Widows Investment Partnership in Edinburgh may not just make business sense, but serve the useful political purpose of demonstrating to Scots that Lloyds really does respect their financial acumen.

The plunging asset values revealed in yesterday's HBOS trading statement will increase the problems faced by Mr Daniels in shrinking the group's bloated loan book when it absorbs HBOS's over-inflated operations. Deflating the loan book has the side-effect of reducing the capital the bank needs to keep on its books to satisfy raised regulatory demands on core capital, freeing up sums for buybacks.

The loan portfolio is truly Himalayan. At the end of June, HBOS's loans were £456billion and Lloyds £230billion. Only £430 billion of that £686 billion was covered by customer deposits, leaving £256billion to be raised from the wholesale money markets.

Since then, HBOS's wholesale funding requirements are said by banking sources to have risen to £270billion and Lloyds to £70 billion. The £340 billion total is nearly half the £720 billion that the Government has made available in guaranteed funding for the whole British banking sector.

The difficulty is that Lloyds carries a AAA credit rating, but HBOS has only an A rating. A critical problem will arise for Mr Daniels if the ratings agencies, once they have run the rule over his big new superbank, downgrade Lloyds credit ratings to HBOS levels.

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