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HBOS shareholders back takeover HBOS shareholders back takeover
(about 1 hour later)
Shareholders at Halifax Bank of Scotland (HBOS) have overwhelmingly agreed a takeover deal with Lloyds TSB.Shareholders at Halifax Bank of Scotland (HBOS) have overwhelmingly agreed a takeover deal with Lloyds TSB.
It was backed by Lloyds shareholders in November, and HBOS shareholders were widely expected to follow suit. Lloyds shareholders had backed the deal in November, and HBOS shareholders had been widely expected to follow suit.
Meanwhile, HBOS shares fell more than 22% as the bank said it was operating in "increasingly difficult market conditions" and bad debts were rising.Meanwhile, HBOS shares fell more than 22% as the bank said it was operating in "increasingly difficult market conditions" and bad debts were rising.
Lloyds fell almost 17% and Royal Bank of Scotland lost 16% on fears the sector shared HBOS's problems.Lloyds fell almost 17% and Royal Bank of Scotland lost 16% on fears the sector shared HBOS's problems.
'Magnitude of deterioration''Magnitude of deterioration'
HBOS said that bad debts and losses on assets had risen to £8bn ($11.9bn) in the first 11 months this year, up £3.2bn since end-September. HBOS said that bad debts and losses on assets had risen to £8bn ($11.9bn) in the first 11 months this year, up from £4.8bn at the end of September.
HBOS remains confident in its ability to navigate through this difficult period, as it becomes part of the enlarged Lloyds Banking Group HBOS statement More grim newsHBOS remains confident in its ability to navigate through this difficult period, as it becomes part of the enlarged Lloyds Banking Group HBOS statement More grim news
Bad debts on corporate loans jumped to £3.3bn from £1.7bn.Bad debts on corporate loans jumped to £3.3bn from £1.7bn.
"Global market and economic conditions, UK recession and increasing unemployment will continue to present a particularly challenging operating and credit environment," HBOS said."Global market and economic conditions, UK recession and increasing unemployment will continue to present a particularly challenging operating and credit environment," HBOS said.
"However, through the injection of capital and liquidity facilitated by the UK government, both currently and going forward, HBOS remains confident in its ability to navigate through this difficult period, as it becomes part of the enlarged Lloyds Banking Group," it added."However, through the injection of capital and liquidity facilitated by the UK government, both currently and going forward, HBOS remains confident in its ability to navigate through this difficult period, as it becomes part of the enlarged Lloyds Banking Group," it added.
Analysts said that HBOS's trading update showed how fast the economy was deteriorating.Analysts said that HBOS's trading update showed how fast the economy was deteriorating.
"On retail things are going to get worse, but people were expecting that," said Mamoun Tazi, analyst at MF Global."On retail things are going to get worse, but people were expecting that," said Mamoun Tazi, analyst at MF Global.
"On the corporate side people knew it was going to get bad, but it's worse in terms of magnitude and speed of deterioration," he added."On the corporate side people knew it was going to get bad, but it's worse in terms of magnitude and speed of deterioration," he added.
'Public interest''Public interest'
The UK government gave the green light to the takeover on 31 October.The UK government gave the green light to the takeover on 31 October.
The bank has got itself into such a state it's the only way to save the company Gary Maddock, private HBOS shareholder
It overruled competition concerns raised by the Office of Fair Trading.It overruled competition concerns raised by the Office of Fair Trading.
Business Secretary Lord Mandelson said at the time that the public interest of "preserving the stability of the financial system" outweighed any potential anti-competitive effects.Business Secretary Lord Mandelson said at the time that the public interest of "preserving the stability of the financial system" outweighed any potential anti-competitive effects.
A legal challenge to the takeover was rejected on Wednesday.A legal challenge to the takeover was rejected on Wednesday.
The Competition Appeal Tribunal was asked to decide whether the government had been right to bypass competition concerns in allowing HBOS to be rescued.The Competition Appeal Tribunal was asked to decide whether the government had been right to bypass competition concerns in allowing HBOS to be rescued.
When the deal is completed, it will lead to the creation of a banking giant with 145,000 staff and 3,000 branches. Job fears
Shareholders attending the meeting said they had little choice but to accept the deal.
"I shall vote in favour [of the takeover] because the bank has got itself into such a state it's the only way to save the company," Gary Maddock, an HBOS shareholder, told the Reuters news agency.
But Scottish Liberal Democrat leader Tavish Scott said that he was "disappointed but not surprised" by the fact the takeover deal had been approved.
"This is bad news for jobs and competition in Scotland. Scottish customers and businesses will face higher bank charges in the future as a result," he said.
When the deal is completed, it will lead to the creation of a banking giant with 145,000 staff and 3,000 branches. However, there are fears that thousands of jobs could be lost after the takeover goes through.