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HBOS 'may get government bailout' MSPs back call to block takeover
(about 3 hours later)
The chancellor has indicated he would consider bailing out HBOS, even if its takeover by Lloyds TSB falls through. A call to block the proposed takeover of HBOS by Lloyds TSB has been passed by the Scottish Parliament.
Alistair Darling has written to the Scottish Government to say the needs of both banks would be reassessed. MSPs backed a motion at Holyrood calling for the Edinburgh-based bank to stay independent by gaining access to the UK Government's bank bailout fund.
It came as the Scottish Liberal Democrats urged MSPs to back a parliamentary motion, demanding HBOS was kept independent. But the Tories said the takeover should be decided by shareholders at the two banks, not politicians.
Party leader Tavish Scott said the Edinburgh-based bank should have access to the UK Government's bailout fund. Chancellor Alistair Darling indicated he would consider bailing out HBOS, even if the takeover fell through.
In his letter, Mr Darling said the Financial Services Authority watchdog would reassess the recapitalisation needs of both banks, should the takeover not happen. Scottish Liberal Democrat leader Tavish Scott, who brought the motion forward, said the circumstances surrounding the proposed £12.2bn HBOS takeover had changed in the wake of the UK Government's £37bn banking bailout.
In these few short weeks the global banking system has changed more than it has done in a generation Tavish ScottScottish Liberal Democrat leader "The UK Government must now sit up and listen to the will of parliament," he said, after MSPs backed the motion by 61 votes to 40. We do not believe politicians should interfere in the commercial decisions taken by financial institutions and their shareholders Derek BrownleeScottish Conservatives
Mr Scott told the Scottish Parliament that the circumstances surrounding the proposed £12.2bn HBOS takeover had changed in the wake of the UK Government's £37bn banking bailout. "Ministers must step in and use the taxpayers' billions to secure the long term future of HBOS and the Scottish financial industry."
"A few short weeks ago this takeover was the only game in town," he said. In a letter to the Scottish Government, Mr Darling said the Financial Services Authority watchdog would reassess the recapitalisation needs of both banks, should the takeover not happen.
"The UK Government was correct to make that case, but at that time. Finance Secretary John Swinney said the letter "made clear" there were other opportunities, adding: "We will continue to have dialogue with the chancellor to ensure these propositions are fully and properly considered by the United Kingdom Government."
"In these few short weeks the global banking system has changed more than it has done in a generation." He said it was the Scottish Government's duty to protect the country's best interest by maintaining HBOS as an independent body as a way to save jobs and headquarter functions in Edinburgh.
Jobs undertaking Tory finance spokesman Derek Brownlee said everyone was keen to ensure the best outcome for Scotland if the takeover went ahead - but warned: "We do not believe that politicians should interfere in the commercial decisions taken by financial institutions and their shareholders unless there is no other option."
Meanwhile, the issue came up at first minister's questions, when deputy Labour leader Johann Lamont accused Alex Salmond of failing to secure guarantees during his talks with Lloyds TSB bosses this week on protecting jobs and retaining HBOS headquarters functions, if the takeover went ahead. 'Titanic hug'
She told him the first minister was not alone in wanting to protect the interests of Scottish workers, adding: "The fact of the matter is, you sought two guarantees and you secured none." John Park, Labour's economy spokesman, said he personally knew many workers who could be affected by the move, adding: "Many of these jobs are part time, flexible and relatively well paid.
Mr Salmond replied that he could not say Lloyds TSB gave undertakings in terms of either numbers or decision-making jobs in Scotland. "In particular they provide a level of flexible working that has greatly improved standards of living across Scotland."
Green MSP Patrick Harvie said debating the HBOS takeover without addressing the fundamental causes of economic trouble was "pointless".
"It amounts to little more than a group hug on the deck of the Titanic," he said.
Meanwhile, the proposed takeover came up at first minister's questions, when deputy Labour leader Johann Lamont accused Alex Salmond of failing to secure guarantees during his talks with Lloyds TSB bosses this week.
Mr Salmond replied that he could not say Lloyds TSB gave undertakings.
"The argument being put forward by Lloyds TSB is that until they go through the merger process, until the merger is completed, they are not in a position to look at the organisational structure of any merged organisation," he told MSPs."The argument being put forward by Lloyds TSB is that until they go through the merger process, until the merger is completed, they are not in a position to look at the organisational structure of any merged organisation," he told MSPs.