Britain's competition watchdog said today it will look at the profitability of banks and building societies as part of its investigation into Lloyds TSB's planned takeover of Abbey National.
The British Competition Commission also said in a statement it would look at the extent to which inertia meant customers were losing out on better deals offered to attract new business.
A spokesman for the authority said if the takeover were found to be against the public interest it might well be blocked outright or need business units or branches to be sold off to get clearance.
Shares in both banks opened slightly lower today in a weak London market. Lloyds was 0.5 per cent lower at £7.29, while Abbey National was indicated 1 per cent lower at £11.54.
Events kicked off last November when Abbey said it had approached Bank of Scotland about a merger. A month later Abbey said it had received a letter from Lloyds about a combination of the two.
Last December 13th Lloyds confirmed it intended to offer 1.5 new shares and 260 pence cash for each Abbey share - terms that have not been changed since.
Britain's trade secretary Mr Stephen Byers referred Lloyds's bid to the Competition Commission in February because the combined group would control nearly a third of British current accounts.