A last-ditch bid to block the planned Lloyds TSB merger with HBOS has been launched.

A group of businessmen, bank customers and shareholders is to seek a legal ruling that Business Secretary Lord Mandelson's decision to allow the merger was unlawful.

The group is to seek the ruling from the Competition Appeal Tribunal, a specialist legal body whose function is to decide appeals on competition issues.

Tribunal cases are heard by panels chaired by a judge who sits with two experts.

The legal bid is being mounted by the Merger Action Group (MAG), whose spokesman is an Edinburgh architect, Malcolm Fraser, who was responsible for the repair and renewal of HBOS's historic headquarters in Edinburgh.

The Government gave the green light to the takeover on October 31 after over-ruling competition concerns raised by the Office of Fair Trading.

Lord Mandelson said the public interest of "preserving the stability of the financial system" outweighed any potential anti-competitive effects.

Lloyds TSB shareholders backed the merger at a meeting in Glasgow on November 19 and HBOS shareholders are to decide in December.

The MAG is asking for the tribunal to sit in Edinburgh as it is a Scottish group and both banks are registered in Scotland.

Mr Fraser said: "As a group, we are extremely concerned that due legal process has been ignored.

"In Scotland, particularly, there is a widespread and growing unease at what has taken place.

"Given that taxpayers are ultimately funding the takeover, we are simply asking that the law is properly applied and that our long-term interests are protected.

"We do not feel that is too much to ask."

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