LLOYDS TSB shareholders yesterday backed the proposed takeover of ailing rival HBOS.

The shareholders voted 95.98 per cent in favour of the controversial deal at the Lloyds TSB Group general meeting in Glasgow. They also backed plans to raise £5.5 billion through the issue of new shares and special preference shares to strengthen Lloyds's balance sheet.

If the merger gets the go-ahead, it will create a banking giant with about 145,000 staff and 3,000 branches across the UK.

The vote was comprised of the electronic vote from the majority of the 372 shareholders at the meeting. This was added to those who cast their vote by proxy.

Lloyds TSB chairman Sir Victor Blank said that the result of the vote was an "important milestone" in the history of the company. - (PA)