Assurances are being sought over Scottish jobs after Lloyds TSB unveiled details of its takeover of HBOS.
Lloyds TSB said it would continue to use the HBOS headquarters in Edinburgh and would focus on retaining jobs north of the border.
It also said it would continue to print Bank of Scotland notes.
Chancellor Alistair Darling - who represents an Edinburgh constituency - said he was "extremely concerned" about local jobs and was seeking assurances.
First minister's questions in the Scottish Parliament were extended to allow the issue to be discussed.
There will also be a ministerial statement and debate on the takeover at Holyrood next Wednesday.
HBOS has 17,000 staff in Scotland, while Lloyds TSB has more than 7,000 employees.
"It is very sad for employees of HBOS," said the chancellor.
"The new bank has made it clear that it wants to maintain its Scottish headquarters in Edinburgh.
"I've spoken to Lloyds TSB as well as to HBOS because I am extremely concerned about jobs.
"There are many of my constituents in Edinburgh who will be affected by this and it will be very worrying for them.
"But I know that the new organisation will be very keen to make its position as clear as it possibly can and I very much want a significant presence to remain there."
The chancellor also confirmed the government would "waive competition requirements" in relation to the takeover.
Ron Hewitt, CEO of the Edinburgh Chamber of Commerce, said the merger also had implications for ancillary services that relied on the city's financial sector, such as lawyers, accountants and taxi companies.
"It clearly goes right through the whole community from the little shop supplying and supporting employers right through to major companies," he said.
However, Mr Hewit said the capital would recover and the merger would create a more stable bank with a safer banking strategy.
He added: "Edinburgh is a very attractive proposition for investors not only for its location but also for its skill base."
Wendy Dunsmore of the Unite union said the situation was "catastrophic" for HBOS and Lloyds TSB employees in Scotland.
"The banks are on the same high street and they're offering a very similar product," she said.
"They're not going to need two people doing the same job twice."
Lloyds TSB unveiled the terms of its £12.2bn takeover of Britain's biggest mortgage lender after the HBOS share price plunged.