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Lloyds TSB seals merger with HBOS | Lloyds TSB seals merger with HBOS |
(11 minutes later) | |
Lloyds TSB is to merge with HBOS, creating a banking giant which will hold close to 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. | 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. | 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. | 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 at 147.10p while Lloyds ended unchanged at 279.75p. | Shares in the lender eventually closed 19% lower at 147.10p while Lloyds ended unchanged at 279.75p. |
How big are these finance firms? | How big are these finance firms? |
The development comes as the credit crunch has wreaked havoc on some of the world's biggest financial institutions in recent days:The global financial crisis In pictures
| The development comes as the credit crunch has wreaked havoc on some of the world's biggest financial institutions in recent days:The global financial crisis In pictures
|
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 Union warning on mergerBank of Scotland timeline | 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 Union warning on mergerBank 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." | "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. | 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. |
He said the deal should reassure HBOS savers but said: "Longer term there is anxiety about the clout this bank will have." | He said the deal should reassure HBOS savers but said: "Longer term there is anxiety about the clout this bank will have." |
And he added that with continued uncertainty in the financial markets, he thought the worst of the credit crisis was "far from over". | And he added that with continued uncertainty in the financial markets, he thought the worst of the credit crisis was "far from over". |
Ray Boulger, at John Charcol, said the deal would mean less competition and therefore reduced choice for consumers. | |
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. | 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. |
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