Lloyds TSB, which does the bulk of its mortgage lending under its Cheltenham & Gloucester brand, is the UK’s third biggest lender in terms of outstanding home loans. During 2007, the latest year for which figures are available, it wrote 8% of all mortgages in the UK.

Britain’s financial watchdog, the Financial Services Authority, said yesterday that HBOS was ‘well capitalised’ despite sharp losses to its share price this week.

Meanwhile, the value of shares on Asian markets fell sharply again early today as the global financial crisis deepened on reports of trouble at more US banks, including the Wall Street giant Morgan Stanley.

Japanese stocks fell by over 3% with Hong Kong down by over 5%.

The declines followed a drop of over 4% on the Dow Jones index in New York.

Shares in Morgan Stanley and Goldman Sachs – the last two major investment banks standing following the recent upheavals – were down by 24% and 14% respectively.

The Wall Street Journal and The New York Times have reported that Morgan Stanley, whose stock fell to its lowest level in ten years, is considering a merger with a US commercial bank.

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