This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.
You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/7622180.stm
The article has changed 9 times. There is an RSS feed of changes available.
Version 7 | Version 8 |
---|---|
Lloyds TSB seals merger with HBOS | Lloyds TSB seals merger with HBOS |
(about 1 hour later) | |
Lloyds TSB is to merge with HBOS, creating a banking giant which will hold close to one-third of the UK's savings and mortgage market. | |
The firms' boards agreed to a deal, at a price of 232p per HBOS share, following talks on Wednesday. | |
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 in the morning, says BBC business editor Robert Peston. | |
Market fluctuations | |
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. |
The deal was announced after a day during which HBOS shares had fluctuated wildly on the London market, climbing as high as 220p and falling as low as 88p. | |
Shares in the lender eventually closed 19% lower at 147.10p, while Lloyds shares ended unchanged at 279.75p. class="bodl" href="#graph">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: 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
| |
| 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">Salmond attacks financial 'spivs' 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," he said. | |
The deal was negotiated at the very highest 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. |
'National interest' | |
He said this transaction, which will create a giant firm with 22 million customers, was truly exceptional in its scale and would not usually be allowed. | |
"It's the kind of the deal that ministers would normally expect the competition watchdogs to block," he said. | |
"But on this occasion they are using a national interest clause in competition law to override any objections the watchdogs would have," he explained. | |
The government supported such a deal because any failure of HBOS would have such a damaging impact on the UK. | |
Richard Lambert, the CBI's director-general said: "This looks like the right outcome. Lloyds TSB is a strong, well capitalised institution, and the new entity will be well placed to withstand the current turbulence. | |
"The last thing we want is a sharp contraction of bank balance sheets because of the impact it would have on the availability of credit." | |
While the deal should reassure HBOS savers, there is some anxiety about the power the merged banks will have. | |
Ray Boulger, of 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, with the future of HBOS chief Andy Hornby unclear. | |
Return to top | Return to top |