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PM confident on Lloyds HBOS deal PM confident on Lloyds HBOS deal
(about 1 hour later)
Prime Minister Gordon Brown has said he is confident the takeover of HBOS by Lloyds TSB will go ahead. UK Prime Minister Gordon Brown has said he is confident the takeover of HBOS by Lloyds TSB will go ahead.
Mr Brown made the statement amidst intensifying speculation that Lloyds could renegotiate the deal after HBOS shares fell almost 14% on Tuesday. Mr Brown made the statement amid intensifying speculation that Lloyds could renegotiate the deal after HBOS shares fell almost 14% on Tuesday.
BBC business editor Robert Peston said people close to the deal had told him there was no chance that Lloyds would change the terms of the takeover.BBC business editor Robert Peston said people close to the deal had told him there was no chance that Lloyds would change the terms of the takeover.
HBOS investors are to get 0.83 Lloyds shares for every HBOS share they own.HBOS investors are to get 0.83 Lloyds shares for every HBOS share they own.
Stormy timeStormy time
HBOS shares have had a rollercoaster time in the past fortnight during which time they've lost more than half of their value.HBOS shares have had a rollercoaster time in the past fortnight during which time they've lost more than half of their value.
At one point on Tuesday, shares in HBOS, the UK's biggest mortgage lender, fell 26%. They closed at 122.4p on Tuesday.At one point on Tuesday, shares in HBOS, the UK's biggest mortgage lender, fell 26%. They closed at 122.4p on Tuesday.
But speaking to Sky News, Mr Brown said that after having spoken to those concerned, he was confident the deal would go ahead.But speaking to Sky News, Mr Brown said that after having spoken to those concerned, he was confident the deal would go ahead.
But he was keen to stress that this was a "matter for shareholders not a matter for Government".But he was keen to stress that this was a "matter for shareholders not a matter for Government".
First things first: if Lloyd's TSB's takeover of HBOS were to collapse, HBOS itself would collapse and we would all be staring into the abyss. So that's not going to happen Robert Peston, BBC Business Editor Robert Peston's blog
Responding to whether the government would bail out HBOS were the deal to collapse, Mr Brown said that the government had already "dealt" with this by helping the merger take place.Responding to whether the government would bail out HBOS were the deal to collapse, Mr Brown said that the government had already "dealt" with this by helping the merger take place.
"We changed the competition law to make it possible," he added."We changed the competition law to make it possible," he added.
When the deal was struck two weeks ago, it was worth £12bn.When the deal was struck two weeks ago, it was worth £12bn.
Full steam ahead?Full steam ahead?
Analysts are cautious about the likelihood of the deal going ahead.Analysts are cautious about the likelihood of the deal going ahead.
"The market is implying that [the deal] does not happen," said Alex Potter of Collins Stewart."The market is implying that [the deal] does not happen," said Alex Potter of Collins Stewart.
But an HBOS spokesperson said it was "full steam ahead" and that it was "the right deal for HBOS shareholders".But an HBOS spokesperson said it was "full steam ahead" and that it was "the right deal for HBOS shareholders".
On Tuesday, Lloyds said the deal was on track and should be completed by the end of 2008.On Tuesday, Lloyds said the deal was on track and should be completed by the end of 2008.
"This is a fantastic opportunity to create one of the UK's leading financial services groups," a spokesman said."This is a fantastic opportunity to create one of the UK's leading financial services groups," a spokesman said.
Lloyds shares closed 4.3% up on Tuesday.Lloyds shares closed 4.3% up on Tuesday.
Markets and banking stocks in particular have been adversely affected by the vote of the US House of Representatives to block the proposed $700bn (£380bn) banking bail out, though hopes have been raised that the US Senate will approve a modified version on Wednesday.Markets and banking stocks in particular have been adversely affected by the vote of the US House of Representatives to block the proposed $700bn (£380bn) banking bail out, though hopes have been raised that the US Senate will approve a modified version on Wednesday.
HBOS entered into the agreement with LLoyds when its share price fell sharply, following the collapse of US investment bank Lehman Brothers.HBOS entered into the agreement with LLoyds when its share price fell sharply, following the collapse of US investment bank Lehman Brothers.
A deal between HBOS and Lloyds would create a business with almost a third of the UK's mortgage market with some 3,000 branches.A deal between HBOS and Lloyds would create a business with almost a third of the UK's mortgage market with some 3,000 branches.