Shareholders in Lloyds TSB are to vote on the proposed takeover of Halifax Bank of Scotland (HBOS) later.
There have been protests outside the hall in Glasgow in which Lloyds TSB shareholders are to vote on the proposed takeover of HBOS.
If approved, the takeover will create a UK banking giant with 145,000 staff and 3,000 branches.
Members of the Unite union have been demonstrating against the job losses that are likely to result from it.
The proposal has met opposition from two senior Scottish bankers, who have said HBOS could remain independent.
On Tuesday, the chancellor warned that shareholders could receive much less cash if the deal falls through.
Protests are expected outside the meeting in Glasgow. However, the takeover is expected to be voted through by Lloyds TSB shareholders.
The deal, which will create a banking giant with 145,000 staff and 3,000 branches, is expected to be approved.
HBOS investors will vote on the deal next month.
Unite general secretary Derek Simpson said the protesters were demanding that, "Lloyds TSB shareholders do not merely consider the financial rewards of a takeover of HBOS, but the wider social and employment implications".
Royal Bank of Scotland shareholders will also vote on Thursday over plans to raise £20bn of capital.
Shareholder risk
On Tuesday, Chancellor Alistair Darling said that any attempts by any of the banks to renegotiate the government's £37bn bail-out of the UK banking sector could prove more costly for shareholders.
Sir Peter Burt, formerly of the Bank of Scotland, and Sir George Mathewson, ex-head of the Royal Bank of Scotland have said HBOS could remain independent if it were to take the government's bail-out money without merging with Lloyds TSB.
The Scottish Liberal Democrat leader Tavish Scott on his opposition to the takeover
But Chancellor Alistair Darling said on Tuesday that attempts by any of the banks to renegotiate the £37bn bail-out of the banking sector could prove costly for shareholders.
He said that access to the government deal was not "automatic" and that any bank seeking a new package risked getting a far lower share price than when the offer was first made.
He said that access to the government deal was not "automatic" and that any bank seeking a new package risked getting a far lower share price than when the offer was first made.
Takeover opposition
His statement was criticised by Tavish Scott, leader of the Scottish Liberal Democrats.
The government's plan to inject capital into banks by buying share stakes in them has been taken up by HBOS, Lloyds TSB and Royal Bank of Scotland.
"At a time of economic recession it's difficult to see why the Labour government wants to throw people out of work," he told the BBC.
Earlier this month, Sir Peter Burt, formerly of the Bank of Scotland, and Sir George Mathewson, ex-head of the Royal Bank of Scotland, tried to block the HBOS merger with Lloyds TSB.
"That's effectively what the chancellor did last night by issuing a statement, which said that HBOS might not be eligible for the bank bail-out."
The two have argued that HBOS could survive on its own, drawing on the funds on offer under the government's bail-out package.
HBOS shares have continued to fall since the bail-out was negotiated, so the government is threatening that if it had to be renegotiated it would be based on the current share price.
However that would mean re-negotiating with the government.
Sustainable business
The chancellor signalled that there was "no automatic right of access to the recapitalisation scheme".
The chancellor also signalled that there was "no automatic right of access to the recapitalisation scheme".
"The institution must have a sustainable business model and delivery plan," he said.
"The institution must have a sustainable business model and delivery plan," he said.
The Financial Services Authority has estimated HBOS would have to raise £12bn if the takeover did not go ahead.
Mr Darling was accused by an SNP MSP of seeking to scupper plans that could keep HBOS independent.
Mr Darling was later accused by an SNP MSP of seeking to scupper plans that could keep HBOS independent.
Alex Neil said: "Once again the Treasury seems to be doing everything it can to inject doubt and frustrate alternate plans that could keep HBOS independent and safeguard competition and tens of thousands of jobs."
Alex Neil said: "Once again the Treasury seems to be doing everything it can to inject doubt and frustrate alternate plans that could keep HBOS independent and safeguard competition and tens of thousands of jobs."
Criticism also came from the Scottish Liberal Democrat leader, Tavish Scott, who said: "Is the chancellor really saying he will allow an independent HBOS to collapse? That is not a credible statement from the UK Government."
But HBOS chairman Dennis Stevenson warned last week that the bank may have to be nationalised if the takeover falls through.
HBOS investors will vote on the deal next month.
Royal Bank of Scotland shareholders will also vote on Thursday on plans to raise £20bn of capital.
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