From correspondents in London, England, 01:31 PM IST

Britain's Lloyds TSB Bank Thursday confirmed it has agreed to take over mortgage lender Halifax Bank of Scotland (HBOS) in a deal worth 12.2 billion pounds ($21.3 billion).

The deal, which creates biggest largest retail bank, was hammered out during a day of hasty talks after a sharp drop in HBOS' share price on the stock exchange in the turmoil on markets this week.

Lloyds paid 232 pence per HBOS share, which was worth 147.1 pence at market close Wednesday.

The government backed the merger, saying stability in the banking system was of the utmost priority. Reports said there were fears of a run on HBOS.

The new bank, likely to be called Lloyds TSB, will cover a third of the entire mortgage market in Britain and have 38 million customers.

(Staff Writer, © IANS)