Continental Europe is in the throes of a wave of bank mergers, including that between Union Bank of Switzerland and Swiss Bank Corporation to create the world's largest bank. The Netherlands' ING recently also bought Belgium's BBL. The mergers, of which another spate is imminent keeping investment bankers very busy, are being spurred by the planned arrival of the single currency next year. Deutsche Bank is one of the continental banks rumoured to be in the market for a big acquisition.
So far no major UK bank has been involved, but the financial markets are bracing themselves for consolidation in the domestic sector as well. Barclays has been reported as wanting to bid for its nearest rival NatWest, although NatWest insists it is not for sale.
However, even if Barclays did launch a bid for NatWest, the Department of Trade and Industry is likely to block it on the grounds that the two banks would have too large a share of the UK market.
"If the euro is going to happen, and clearly it is, from a competition point of view, does it make sense for the DTI, the Office of Fair Trading and the Monopolies and Mergers Commission to have a sort of UK myopia in looking at that issue?" asked Mr Blackburn.
"In the future we will have to change that mindset. The UK will have to say to itself, company X has 40 per cent of business in the offshore island (meaning Britain) but it actually has only 20 per cent of Europe."
Mr Blackburn pointed to the case of Finland where Merita, which is merging with Nordbanken of Sweden, has over 40 per cent of the market.
With a market capitalisation of around pounds 21bn, Halifax is currently one of Europe's 10 leading financial institutions. It is known to be seeking a way of spending a pounds 3.5bn treasure chest, most likely through an acquisition.
Although that is a lot of money for a company to have spare, analysts say it would have also to offer shares for a financial institution of any size. The Alliance & Leicester building society, for example, is worth pounds 5.2bn even before anyone launches a bid to buy it.
Any cross-border banking mergers also have to be vetted by the European Union's competition authorities.