Bank shares on the slide after HBOS revealed bad debts on lending have risen to £1.7bn in the 11 months to the end of November.

The figures could worsen, as they were £1.2bn in September and just £700m in June.

"In light of the worsening economic climate, trends in retail impairment charges are likely to come under further pressure," HBOS warned.

HBoS shareholders are due to vote today on the merger with Lloyds TSB – and the result looks like a foregone conclusion to go with Government brokered deal.

The shares fell 10% at 78.7p ahead of the meeting in Birmingham.

Lloyds TSB shares also fell by more than 9% to 143.3p.

Royal Bank of Scotland, 58% owned by the state, has dropped 11% to 58.8p.

Barclays, which has turned down government help and raised money from the Middle East instead, is down almost 7% at 150.4p.

Credit card firms and the Government have agreed new consumer safeguards.

The Government had threatened to refer the credit card industry to the Office for Fair Trading if it did not agree to a new code of conduct.

Over the past year, most credit card firms have increased rates despite sharp reductions in the Bank of England base rate.

Cardholders now face an average interest rate of 17.7% on credit cards - more than eight times higher than the base rate - up from 16.6% last year.

The FTSE closed 31 points up last night, climbing 4367 to 4388.

In the US the DOW was down 185 points overnight at 8565, from opening at 8750. Wall Street reacted to the gloom that the Bank of America is laying off up to 35,000 staff, and, the US Senate has failed to reach a bailout deal for the motor industry.

Sterling hit a record low against the euro of 89.39 pence and fell slightly against to $1.4886 against the dollar.