The biggest hit will come from RBS's sale of its insurance arm, which employs 3,850 in Yorkshire.

Including the Direct Line, Churchill, Green Flag and Privilege brands, the division employs 2,948 in Leeds, 695 in Doncaster, 147 in Wakefield and 60 in Sheffield.

The break-up comes as part of a deal by the two banking groups to ease European competition concerns over the level of state support given to them in the past year.

And taxpayers will be hit for at least another £28.7bn having already paid out £37bn for shares in the two banks since the crisis began, although Lloyds paid back more than £2bn in the summer.

Their £39bn lending commitments to home owners and businesses remain unchanged while they have had to agree to new rules on staff bonuses.

The disposal of 920 branches between them – which could take up to four years – will put around 10 per cent of the UK retail banking market up for grabs.

Banking union Unite said Yorkshire would be one of the worst- hit areas in the UK as it has such a high concentration of employees. The union estimates that 25,000 UK jobs are at risk from the banking sell-off.

Lloyds will offload at least 600 branches including 250 Lloyds TSB branches in England and Wales. Unite estimates the move will put 2,500 jobs at risk.

In addition to the sale of the insurance arm, RBS announced plans to sell 318 bank branches which employ 6,000 staff.

The possible impact to the region was only just becoming clear yesterday when HSBC also announced plans to axe a further 1,700 posts from its UK workforce, in what the unions described as a cynical attempt to bury bad news on a busy day.

The HSBC job losses include 110 in the Sheffield collections team and 40 staff who work in card processing in Leeds.

RBS said it expected buyer interest for its insurance assets and it is considering floating the business.

A previous sale was abandoned when the group failed to get a high enough price.

Analysts said likely bidders include three European insurers – Zurich Financial Services, Generali and Allianz – and US insurance giant Allstate Corp.

Commentators said a foreign buyer might be better for UK job prospects but all four potential suitors already have UK operations and call centres.

Unite said ministers and employers now have a duty to save jobs.

National officer Rob MacGregor said: "We cannot allow a situation to arise where some 25,000 loyal workers in bank branches in high streets and towns across the country are made to pay the price for the banking executives' recklessness. Any potential buyers should be assessed on their commitment to job security and protection of terms and conditions not short-term profits."

Chancellor Alistair Darling said the latest plans would increase competition and represented a "better deal" for the taxpayer.

Yorkshire Forward chief executive Tom Riordan said: "The brands in question here are strong brands with a strong track record and a skilled, flexible and loyal workforce. Let's also not forget that they are part of a regional industry that has weathered this recession.

"I'm confident that, as viable businesses, these brands would not be sold at this point if they weren't going to continue in the same vein."

The good news for the region was that Lloyds has not been forced to sell off Halifax.

Linda Riordan ,MP for Halifax, said: "This is good news for Halifax, for staff and a welcome boost to the local economy. The Halifax mortgage brand combines a skilled, experienced local workforce which is just too important for the group to discard."

JOBS AT RISK

RBS

RBS is to sell its insurance division, which includes Direct Line, Churchill, Green Flag and Privilege. It employs:

2,948 in Leeds

695 in Doncaster

147 in Wakefield

60 in Sheffield

LLOYDS

Lloyds's branches sell-off will include:

Around 250 Lloyds TSB branches in England and Wales

185 Lloyds TSB branches in Scotland employing 1,300 staff

164 Cheltenham & Gloucester branches employing 850 staff

HSBC

HSBC is to cut around 1,700 posts from its UK workforce. They include:

110 in the Sheffield collections team

40 roles to go in card processing in Leeds.

100 roles will move from Southampton to Leeds