Jan. 14--It has been a laborious process. But in the end what the government wants, it gets. With a wave of the wand the " independent" Competition Commission is swept to one side and Lloyds TSB is allowed to buy HBOS.

What existing shareholders and the market think about this deal is evident from the minimal take-up of the open offer for new shares.

The government, through UK Financial Investments, becomes the biggest shareholder in the new Lloyds Banking Group with a 43.4pc stake after injecting £17bn of capital into the combined bank.

Now comes the hard part. For this deal to work for the minority shareholders (including this writer) chief executive Eric Daniels is going to have to take a meat axe to branches and jobs if the £1.5bn of savings are going to be achieved.

It is not going to look very pretty if the government is offering bribes to keep people in work, but is busy cutting jobs (albeit at arm's length) at the same time.

But being the part owner of a bank is not a comfortable business. The Bank of Scotland, despite all the guff about its troubles being exaggerated, turns out to be a basket case. As for Halifax itself, having the largest stock of mortgages at a time when house prices are already down by 15pc and threatening to do the same again in 2009, may not be the best situation.

Fannie Mae and Freddie Mac ended up with almost 50pc of American mortgages on their books and look what happened to them.

Both Lloyds Banking Group and Royal Bank of Scotland can expect to feel the hot breath of the government on their necks as the Treasury dreams up new schemes to get banks lending again.

Then there is also the embarrassing matter of Lloyds TSB's breaking of sanctions. The Manhattan District Attorney's office has managed to drag a confession of "criminal conduct" out of Lloyds and a $350m fine. But it is a bit embarrassing for the government's anti-terror efforts that a bank, in which it is the dominant shareholder, has been found to be covering up the financial transactions of a rogue regime in Iran which is scouring the world in search of parts for its missile and nuclear programme.

Still at least Lloyds has agreed to provide US authorities with details of the network of financial groups engaged in similar transactions.

Eventually, Lloyds Banking Group will no doubt be restored to reasonable health and to the public markets. But it is hard to have much optimism about the speed with which this can be done.

There is simply too much detritus on the balance sheet for this to happen rapidly.