The UK Treasury is to own 43.4% of the merged Lloyds HBOS bank, newly named Lloyds Banking Group, after few shareholders bought new shares. Only 0.24% of the 7.5 billion shares HBOS offered to existing shareholders were taken up while Lloyds TSB saw only 0.5% of its offered shares taken up.

Lloyds TSB chief executive Eric Daniels (PICTURED) said: "We are pleased that the capital-raising process has completed and that the new, combined group will have a strong financial position".

The government pledged to underwrite both banks' rights issues as part of its £37bn rescue of the UK banking system in October last year.

While the size of the new firm – which will control about 25% of British customers' personal bank accounts and about 28% of the mortgage market – would usually have triggered competition worries, the government waived such concerns arguing that the deal would help maintain the stability of the banking sector.