Analysts say such a deal would allow Lloyds TSB branches to continue offering Scottish Widows life, pension and investment products even if it is owned by Allianz.

Mike Trippet, an analyst with Oriel Securities, said: "Lloyds TSB does not have to own Scottish Widows to distribute its products. Someone else could run the Scottish Widows business and it could agree a distribution deal."

If Lloyds TSB was to table a bid for Dresdner, one of Europe's biggest banks with more than 900 branches, analysts say it would have to approach its shareholders to raise the required capital. This could prove difficult during the credit crunch when other banks are being forced into rights issues.

Offering Scottish Widows, which it bought for £7bn in 1999, to Allianz as a sweetener would save it having to ask shareholders for as much cash.

Scottish Widows is a valuable part of Lloyds TSB's business and delivered a profit of £884m in 2007, up 26% from the previous year.

Eric Daniels, chief executive of Lloyds TSB, told the British Bankers' Association conference this month there is scope for cross-border industry consolidation, sparking rumours that he was eyeing up overseas acquisition opportunities.

An analyst said: "Lloyds TSB is currently in phase two of its growth strategy which is to concentrate on the UK. Phase three is an international roll-out, but an acquisition like this would be a big step for Daniels."

Lloyds TSB refused to comment on speculation.