Deal or no deal? The volatility in HBOS shares is mind-boggling. Only 48 hours ago, many investors seemed convinced that unless Lloyds TSB renegotiated the terms of its rescue merger with HBOS, the UK’s leading mortgage bank, Lloyds’ shareholders would vote against the proposed scheme of arrangement, thereby bringing turmoil to the UK banking sector and forcing the government into another unwanted nationalisation. HBOS shares were in freefall on Tuesday.

Yesterday, though, it was an altogether different story, in large part because Prime Minister Gordon Brown’s vocal support for the deal was echoed by a leading shareholder. Standard Life, whose 3 per cent stake in HBOS is worth roughly as much as its 1.5 per cent holding in Lloyds TSB, let it be publicly known that it was satisfied with the existing merger terms. HBOS shares at one point yesterday jumped in value by almost 36 per cent, before closing up 21 per cent.