The rescue takeover of HBOS by British rival Lloyds TSB will go ahead in spite of sharp falls in the target bank’s share price, Gordon Brown, UK prime minister, insisted on Tuesday in an effort to calm speculation that the deal would have to be renegotiated.

He said: “I’m confident this merger is going ahead. In the end of the day, it is a matter for the shareholders. I’m pretty confident that both parties want to go forward.”