Lloyds TSB and HBOS have announced plans, backed by the government, to raise up to £17bn as they go ahead with their proposed merger, reported BBC.
Lloyds wants to raise £4.5bn from investors and HBOS is seeking £8.5bn. If the shares are not taken up, the government will acquire them.
The government will also directly buy preference shares in the two banks - worth a total of £4bn.
Lloyds TSB said that its acquisition of HBOS would save it £1.5bn a year.
It also announced that the combined group would be named Lloyds Banking Group.
Lloyds did not say how many jobs would be cut as a result of the merger, but Ged Nichols, general secretary of the Accord Union which represents HBOS workers, said he hoped redundancies could be avoided.
"Well they're talking about something in the region of a 16% reduction in their costs, over a time frame into 2011," he told BBC News.
"[The banks] could reduce their employee head count, if it were necessary, without resort to redundancies, whether voluntary or compulsory."
HBOS and Lloyds TSB both said that they were committed to the merger deal despite reports over the weekend that rival bids could emerge.
Since the government first brokered the deal to save HBOS six weeks ago, Lloyds TSB has twice renegotiated the terms of its takeover to reduce the amount of stock it will give HBOS shareholders.
HBOS shareholders will now get 0.605 Lloyds shares for every HBOS share, compared with an earlier offer of 0.833. Initially, there had been proposals for a one-for-one share swap.
Both banks also said that the market turmoil had reduced their earnings.
Lloyds TSB said third quarter profits at its wholesale and international division had been hit by a £270m write-down on assets hit by global credit problems.
HBOS said write-downs and losses on bad debts for the first nine months of this year now stood at £5.2bn, up £2.7bn from the end of June.