The Office of Fair Trading has warned of a loss of competition, but that hardly came as a surprise. It was the factor that stopped the two coming together prior to the crisis that engulfed the banking sector. The OFT report contains a lot of huff and puff but will not blow the house down and, as expected, there is to be no referral to the Competition Commission.

One lingering issue is whether HBOS could survive independently with Government support. But with a funding gap of £198bn – far greater than any other UK bank – it was clearly dependent on wholesale funds which seized up and which remain restricted. In a sector that had fattened itself on its gluttony for credit, one or more of its participants had to go and HBOS was the sacrificial lamb. There remains little reason to believe HBOS could stand alone for long without inviting another partner some time soon.

Those still campaigning for the Scottish bank to remain independent overlook the commercial logic, preferring to feast on national sentiment. The Dutch suffered a similar blow to national pride when Royal Bank of Scotland, Fortis and Santander swooped on ABN Amro, but no one was dispatched from Holyrood to offer condolences on behalf of the Scottish people. With a by-election looming, it may be too cynical to detect a little self-interest in this groundswell of political support for HBOS.

The "leading" business people attempting to stop the merger are more conspicuous by who is not among their number. Those who have so far spoken include one former HBOS executive – Jim Spowart – an estate agent and SNP supporter Sir Tom Farmer. Who else is speaking up for it? Where are those who also got fat on its largesse?

The latest rumour that an overseas bidder is showing interest takes us back to this newspaper's report on September 21, the first Sunday after the merger was announced. There was some tentative interest, not least because HBOS was seen as a rare opportunity for a big player to get a foothold in the UK and Europe. An overseas bank would also avoid the competition issue. But in truth, few banks could find the cash to splash around on acquisitions.

Subsequently, this newspaper reported that two London-based financiers, one believed to be an investment banker, were looking to bring in a third party. But no one has yet put their head above the parapet.

One concern is that "overseas" interest may include those with plenty of money but offering little or no transparency in their dealings. Would it really be better for Scotland if HBOS was run by a Middle Eastern fund with little or no accountability to anyone but itself? Against that option, Lloyds TSB looks like a friend indeed.

The big shareholders in both banks – and there is some cross-shareholding – are in favour of the deal. And why not? Let's not forget that these two banks had been talking about a merger for two years. HBOS knew the game was up that long ago.

The row over Lloyds TSB directors getting nine of the 11 boardroom jobs should also come as little surprise. It was stated here weeks ago that the HBOS executives would be overlooked. After all, why would anyone create a new bank out of the directors of a failed one?

Insurance industry bullish about crunch

THE insurance industry cannot shake off speculation that it may be the next sector to suffer from the credit crunch, though the numbers coming out would suggest otherwise.

Philip Scott, the finance director at Aviva, told me last week that despite a dip in the capital surplus, the company – best known for its Norwich Union brand – remained strong and that it could easily withstand any further shocks.

Sandy Crombie echoed that statement on behalf of Standard Life. Trevor Matthews, who has just completed 100 days as chief executive of Friends Provident, is sitting on a surplus that has held up entirely – a unique situation – and FP's focus on fixed income investments rather than equities has turned up trumps.

Rather than worry about credit markets, there is now a focus on a further round of consolidation which may encourage investors to buy into the sector.