For starters, any hopes of rescuing HBOS from its marriage to Lloyds TSB look increasingly forlorn. HBOS is a busted flush, a bank that has become so dependent on the wholesale markets and a business model created around weak sectors that a merger is not only inevitable but desirable. The alternative is full nationalisation or failure and the state is unlikely to pursue the former as it would be stuck with it for a long time.

The deal has already been threatened by investors believing Lloyds to be overpaying, a reflection of HBOS's weakness and the reason why the offer terms had to be renegotiated. It now has to be pushed through quickly as the markets do not like uncertainty at the best of times.

Those pushing for HBOS to remain independent need to take a look at the bigger picture. In this worldwide banking casino HBOS joins a list of others who lost their chips, including Northern Rock, Bradford & Bingley and Bear Stearns. Further consolidation looks inevitable and wrapping HBOS in the saltire and pleading a special case for Scotland will not wash with a global investment community that is more interested in following the money than offering sympathy for any nationalistic pleadings.

HBOS's woes are not a recent phenomenon and nor was its merger with Lloyds TSB a "shotgun marriage". The two have been talking for the best part of two years. Sir Peter Burt, the former chief executive, attempted to consummate a Bank of Scotland merger with NatWest because he knew then that it depended on wholesale funds and that it needed a partner. When the NatWest deal failed, he rushed into the arms of the Halifax.

Popular opinion has it that Bank of Scotland was never the same again and it has become fashionable to refer to the Yorkshire arm as the hated "Haliban". But the merger saved Bank of Scotland from a potentially worse fate.

In truth, neither of the big two Scottish banks could survive on Scottish depositors alone and now that wholesale markets are virtually closed, HBOS has nowhere else to run. The Government has looked at the business model and decided that full nationalisation is a non-starter. Its continued need for third party funds and its dependency on the weak housing, property and corporate lending markets make it too hot to handle. It would simply struggle to make money. Therefore, those who want the Lloyds marriage called off are merely postponing the day when it has to seek another merger, or face ruin.

The newly-combined group will have access to a bigger deposit base that Lloyds TSB has been building and less exposure to the toxic assets that contributed to the downfall of so many other banks. The big issue now is how quickly the UK banks can pay off the Government's preference shares in order to start paying a dividend to ordinary shareholders. While optimistic noises of a Government U-turn emanate from within the banks, it would appear that Brussels is insisting the UK Government sticks to the original ban on dividends.

This is bad news as it will depress shares further and also limits the opportunity for the forthcoming rights issues to have any chance of attracting meaningful support. Only Royal Bank shares have traded above the issue price, raising hopes that it may avoid having to ask for all of the £15bn it requires from the taxpayer. But without the prospect of a dividend, it will do well not to see its shares plunge further. It can only be hoped that the authorities see that easing the dividend policy would benefit all parties.

Without the prospect of a dividend some Lloyds TSB shareholders may yet vote against the HBOS merger because even under the revised terms Lloyds is still overpaying as HBOS shares continue to plummet. Even so, the Government's 40% stake and the support of both Standard Life Investments and Legal & General will ensure that the deal goes through.

As for those vacating the top jobs at HBOS and RBS, their leaving has to be seen as a sacrifice for getting us into this mess.

While Andy Hornby, chief executive of HBOS, was probably the most culpable for failing to spot the ensuing crisis, Fred Goodwin could at least claim to have taken RBS to the top of the hill before having to march it down again.

He gave Scotland a global leader which will take some time to emulate.