Two top ten shareholders in UK bank Lloyds TSB say they are prepared to back the bank's takeover of UK mortgage lender and investment group HBOS even if the combined bank is barred from paying dividends for a time, according to Reuters, which did not quote the investors by name.

Under a rescue plan unveiled this week, the UK government will provide up to £17 billion to Lloyds and HBOS, underwriting share issues worth £13 billion and buying preference shares worth a further £4 billion. Meanwhile, the government has also taken a large stake in Royal Bank of

Scotland. Both Lloyds TSB and RBS have significant private banking operations.

Later this week, sources said that banks were urging the government to lift restrictions which ban dividend payments until the preference shares are repaid.

The Lloyds shareholders made it clear however that their support did not hinge on the renegotiation of the bailout to allow dividend payments.

One top ten investor, who spoke on condition of anonymity, said: "We would support the deal as it is at the moment. The deal is necessary to keep the whole system running which is why the government has been helping the deal along."

"But clearly selling preference shares to the government is a transfer of money from the bank to the government so if that transfer can be reduced then it is more advantageous for shareholders."

Analysts have said that Lloyds was best placed to push for changes because suspending its dividend - one of the most generous in the FTSE 100 - could erode its shareholders' support for its takeover of HBOS.

A second top ten investor, who also requested anonymity, said: "We believe this is a good deal for both banks and we support it."