Sir Brian said the deal would boost Lloyds' position in the UK life and pensions market. But he added that it did not resolve the issue of how Lloyds was to transform its strength in the UK into a world-beating position at a time when the financial services industry is undergoing sweeping change.
"By no means is this the end of the story. We remain a very active group. The deal transforms the position of the long-term savings business but it does not transform the bank," he said.
He added: "We want to be the best in the world. We will now be going on to the next thing."
Sir Brian insisted that even after yesterday's deal the group still had plenty of firepower if the right deal came along.
"We believe there will be further consolidation in the UK and abroad. We want to be part of that consolidation," he said.
He also said he had no plans to retire despite a general expectation in the City that Sir Brian, who is regarded as British banking's most accomplished dealmaker, would go once Lloyds pulled off its next big acquisition.
Around 900,000 with-profits policy holders at Scottish Widows are to receive windfall cash payouts averaging pounds 6,000 when the deal is completed next spring. Lloyds held out the prospect of some of Widows' policyholders getting cash payouts of up to pounds 100,000. The deal makes Lloyds Britain's second-largest provider of long-term savings, after the Prudential, with a 7 per cent market share. A further 900,000 customers who are not full members will get a one-off payment of pounds 500.
Mike Ross, the chief executive of Scottish Widows who until recently was one of Britain's staunchest defenders of mutuality, will become deputy joint chief executive of Lloyds-TSB - alongside Mike Fairey - with responsibility for the combined life and pensions business of the group. He is eligible for a basic annual salary of pounds 365,000 plus a performance-related bonus equivalent to half as much again. That compares with his salary of pounds 253,700 at Scottish Widows.
The deal will more than double the assets Scottish Widows has under management to pounds 80bn. Mr Ross insisted the decision to demutualise was prompted by the massive changes taking place in the financial services industry and the "inexorable process of consolidation" which has seen smaller and weaker companies such as Scottish Amicable and NPI taken over in recent years.
Mr Ross said the group had received approaches from various parties over the past three years but none of them as compelling as the proposal received from Peter Ellwood, the Lloyds' chief executive, when he contacted Mr Ross three weeks ago. The group had also considered flotation. Yesterday's deal was met with some disappointment in the City where Lloyds shares fell 25p to 899.5p.
One banker said yesterday: "Strategically this is a good deal for them. But this is a great leap of faith in terms of the new business this is expected to generate. It is not a stellar deal."
Unusually for Lloyds, which has established a fearsome reputation for cost-cutting, the deal is predicated on Widows being able to take advantage of Lloyds' extensive branch network to boost sales. Lloyds expects to save pounds 60m a year for the next three years. Mr Ellwood said: "You cannot cut your way to greatness."
Investment bankers said that with the deal not due to be completed until next year, there was a real possibility of a counterbid, although several believed a continental European insurer such as Fortis and Generali was a more likely source.
Although there have been rumours that HSBC is gearing up for a European deal, even after paying $10bn for Edmond Safra's Republic Bank six weeks ago, bankers said they thought it unlikely that another UK bank would risk disrupting the deal.
The deal also raises question marks over the Royal Bank of Scotland, which has long seen Widows as an important ally and business partner, but was apparently unaware of the talks with Lloyds until contacted after the stock market closed on Tuesday night. Both Mr Ross and Mr Ellwood said they would like to maintain the existing joint ventures with RBS.
Mr Ross denied that Widows had been pushed into the deal by concern about the potential liabilities arising from the sale of guaranteed annuities, which promised minimum income levels to pensioners on retirement. These have become expensive to fund as long-term interest rates have fallen.
Lloyds has agreed to pay pounds 5.7bn in cash to compensate members for their loss of rights and a further pounds 1.3bn to cover contingencies from the existing business, which could also be distributed in the form of top-ups to policies at a later date. Around a third of that will come from Lloyds' existing cash resources with the remainder coming from the issue of new debt.
Outlook, page 21