More than 7,000 bank workers could soon know more about their future after the Government approved Lloyds TSB's £12-billion merger with HBOS, overruling competition concerns raised by the Office of Fair Trading (OFT).

Some 2,500 people work in Lloyds TSB and Halifax branches in the city and surrounding area, while a further 4,600 workers – 3,100 for Lloyds and 1,500 for HBOS – work in city centre offices.

Business Secretary Peter Mandelson yesterday said the public interest of "preserving the stability of the financial system" outweighed any anti-competitive risks. The OFT had said the merger risked lessening competition in personal current accounts, small business banking and the mortgage market.