A statement from the Financial Services Authority (FSA) chief executive proves the merger of HBOS and Lloyds TSB does not need to go ahead, SNP MSP Alex Neil has stated.

He made these comments after FSA chief Hector Sants suggested, during a lunch hosted by Scottish Financial Enterprise and the Edinburgh Chamber of Commerce yesterday, that HBOS has sufficient capital to still act as an independent bank.

Responding to the statement, Neil said it "blows the case for a merger between HBOS and Lloyds TSB out of the water."

He argued: “Gordon Brown and Alistair Darling, who are forcing this merger on HBOS, need to go back to the drawing board. If this merger goes ahead it will result in up to 40,000 job losses and create an unacceptable monopoly in Scotland and the rest of Britain.

“Many of these job losses will be in Alistair Darling’s own constituency of Edinburgh South. It will be political suicide for Alistair Darling to proceed with such an ill thought out merger.

“Every effort should now be made by people in Scotland to stop this merger going ahead."

The Scotsman newspaper has also been seeking assurances that a takeover of HBOS by Lloyds TSB is in the best interests of shareholders, customers, employees and the overall Scottish economy.