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Lloyds TSB seals merger with HBOS | Lloyds TSB seals merger with HBOS |
(21 minutes later) | |
Lloyds TSB is to merge with HBOS, creating a banking giant which will hold a third of the UK's savings and mortgage market. | Lloyds TSB is to merge with HBOS, creating a banking giant which will hold a third of the UK's savings and mortgage market. |
Both firms' boards have agreed to a deal, at a price of 232p per HBOS share, following talks. | |
The deal should calm uncertainty about the strength of Halifax-Bank of Scotland after a run on its shares. | The deal should calm uncertainty about the strength of Halifax-Bank of Scotland after a run on its shares. |
The deal is set to be formally announced on Thursday morning, says BBC business editor Robert Peston. | The deal is set to be formally announced on Thursday morning, says BBC business editor Robert Peston. |
The talks between the two banks were first reported by the BBC earlier on Wednesday. | The talks between the two banks were first reported by the BBC earlier on Wednesday. |
With 20% of the UK mortgage market, HBOS is currently the country's largest mortgage lender. Lloyds ranks fourth with an 8% share. | |
On the London market on Wednesday, HBOS shares fluctuated wildly, climbing as high as 220p and falling as low as 88p. | |
Shares in the lender eventually closed 19% lower, while Lloyds ended unchanged at 279.75p. | |
Global turmoil | Global turmoil |
The development comes as the credit crunch has wreaked havoc on some of the world's biggest financial institutions in recent days: href="/1/shared/spl/hi/pop_ups/08/in_pictures_global_financial_crisis/html/1.stm" onClick="window.open('http://news.bbc.co.uk/1/shared/spl/hi/pop_ups/08/in_pictures_global_financial_crisis/html/1.stm', '1221658602', 'toolbar=0,scrollbars=0,location=0,statusbar=0,menubar=0,resizable=1,width=600,height=530,left=312,top=100'); return false;">The global financial crisis href="/1/shared/spl/hi/pop_ups/08/in_pictures_global_financial_crisis/html/1.stm" onClick="window.open('http://news.bbc.co.uk/1/shared/spl/hi/pop_ups/08/in_pictures_global_financial_crisis/html/1.stm', '1221658602', 'toolbar=0,scrollbars=0,location=0,statusbar=0,menubar=0,resizable=1,width=600,height=530,left=312,top=100'); return false;" >In pictures
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| Our business editor said the government had opted to push through the Lloyds TSB-HBOS tie-up after HBOS voiced concerns that depositors and lenders had begun to withdraw their credit from the bank. LLOYDS vs HBOS Branches - Lloyds 1,900; HBOS 1,100Customers - Lloyds 16 million; HBOS 22 millionEmployees - Lloyds 70,000; HBOS 72,000Savings - Lloyds is the UK's fourth largest savings provider; HBOS is the market leaderRetail savings balance - Lloyds £65bn; HBOS £139bn class="" href="/1/hi/scotland/edinburgh_and_east/7621153.stm">Union warning on merger class="" href="/1/hi/scotland/7620761.stm">Bank of Scotland timeline |
"There were growing concerns in the HBOS boardroom that a climate of fear was being created about its future that could have led to a funding crisis, or a Northern Rock-style run - on steroids." | |
The deal was negotiated at a high level, with Prime Minister Gordon Brown telling Lloyds TSB chairman Sir Victor Blank that it would be helpful if Lloyds could end the uncertainty surrounding HBOS by buying it. | |
"It was not in the government's interest for there to be the faintest risk that it would have another Northern Rock on its hands," our business editor added. | "It was not in the government's interest for there to be the faintest risk that it would have another Northern Rock on its hands," our business editor added. |
Following the takeover, Lloyds chief executive Eric Daniels is expected to take the helm of the enlarged group. The future of HBOS chief Andy Hornby is unclear. name="graph"> | |
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