Lord Mandelson has confirmed the Lloyds TSB buy-out of HBOS can go ahead.

The Business Secretary gave the go-ahead despite competition concerns over the superbank the merger will create.

The deal is expected to put 2,000 jobs in Fife alone at risk.

The Office of Fair Trading handed a report on the takeover's impact on competition last Friday, but Lord Mandelson did not refer it to the Competition Commission after ruling the tie-up to be in the public interest.

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

Lloyds TSB announced last month it was rescuing HBOS, which is the country's biggest mortgage lender, after the Government indicated it was prepared to waive competition rules.

The deal will create a banking giant controlling about one-quarter of British current accounts and 28 per cent of home loans.

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