London - Britain's biggest mortgage lender Halifax Bank of Scotland (HBOS) confirmed Wednesday that it was in "advanced merger talks" with leading bank Lloyds TSB.

Rumours and speculation about a possible merger between the two banks had been rife over the past few days, with HBOS shares falling sharply in London in the wake of the collapse of Lehman Brothers.

HBOS is Britain's biggest mortgage lender, covering about 25 per cent of the market with 15 million savers.

If the merger should go ahead, it would create Britain's biggest mortgage and savings bank. (dpa)