The head of Lloyds TSB in Scotland today denied the takeover of Edinburgh bank HBOS would necessarily lead to thousands of compulsory redundancies in Scotland.
Susan Rice, chief executive of Lloyds TSB Scotland, said it would take months for the scale of any job losses to become clear.
Her attempts at reassurance came before the FTSE 100 index closed up 9.3% at 5335.2 - the index's biggest ever one day gain. UK banking stocks soared, with Royal Bank of Scotland up 35% at 217.5p.These gains were helped by the ban on short-selling but mainly driven by the US government plan to free US banks from bad debt.
Asked if it was inevitable that there would be thousands of compulsory redundancies, Ms Rice said: "I can't say that there will because we simply don't know that at this point."
And she said: "Those answers will come months from now."
Ms Rice was speaking as Scotland's banking and political community struggled to digest the full implications of the £12 billion takeover which will create a banking giant.
First Minister Alex Salmond said it was clear Lloyds TSB were envisaging running the merged Bank of Scotland and TSB as single retail bank in Scotland, probably a subsidiary of the wider group, headquartered at The Mound and able to issue Scottish notes.
"There will be a headquarters but that leaves two big questions," he told BBC Radio Scotland's Good Morning Scotland.
"One is the extent of the rationalisation that will take place as a result of the overlapping branch structures.
"And second, the degree of decision-making and autonomy and group operations, genuine head office operations, that will continue in Scotland."
SNP backbencher Alex Neil reacted angrily to reports that HBOS chief executive Andy Hornby will get £2 million worth of shares in Lloyds following the takeover.
"This is totally immoral and unacceptable at a time when thousands of people across the country are worrying about the safety of their jobs and their deposits," said Mr Neil.
"He has hit the jackpot on the back of failure and that is shameful.
"Andy Hornby should be forced to give that back and if he had any sense of honour he would turn it down."
Ms Rice told Good Morning that no number could yet be put on job losses but went on: "Everyone needs to keep in mind that the vast majority of staff in any bank are customer-facing.
"If we bring two banks together, we bring together the customer bases, we still need all those staff to deal with our customers."
It would take three months for the takeover deal to be finalised and two to three years for full integration.
"Over that period of time, staff leave, staff retire, various things happen," said Ms Rice.
"There are often central offices that come together but we may have a bigger operation to cover - we don't have all of that detail."
Ms Rice said "intensive" talks on the possibility of the takeover only took place this week.
The name of the new bank was not yet known but Ms Rice said: "I am absolutely sympathetic to the word Scotland."
She went on: "I believe that we will have head office functions happening here, the group's AGM will continue to take place here.
"The Mound will be kept open, we have had a lot of decision-making here, we have been a subsidiary bank owned by a big group, and we think some of that will continue."
Meanwhile Mr Salmond welcomed action by the Financial Services Authority to ban "short-selling" in listed financial stocks - the practice of selling borrowed shares in the expectation of a falling share price.
This was blamed by some for the fall in HBOS's share price and Mr Salmond said: "Of course it should have happened sooner.
"Frankly, it's a bit late for the Bank of Scotland but it's been done now and that's going to help, along with liquidity moves co-ordinated across the market in stabilising the situation.
"These are welcome moves but it's a bit late for HBOS."
Scottish Labour leader Iain Gray today urged Mr Salmond to broaden the membership of the Scottish Government's Financial Sector Advisory Board, which meets on Tuesday to discuss the takeover.
Mr Gray said it mainly comprised senior industry figures but it was crucial to broaden its base.
"The First Minister must extend membership to all political parties and the council leaders of Scotland two main financial centres, Edinburgh and Glasgow," he said.
"There should also be wider trade union representation, especially considering potential job losses, as well as a broaden representation from Scottish manufacturing and construction sectors."
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