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Courts test HBOS takeover plans Last-ditch HBOS challenge fails
(about 6 hours later)
A petition has been lodged with the Court of Session in Edinburgh questioning the legal arrangements of Lloyds TSB's takeover of HBOS. Lloyds TSB's takeover of HBOS has cleared its final hurdle after a judge in Edinburgh approved the legal arrangements to create the super-bank.
The last-minute intervention, filed by financial journalist Ian Fraser and economist Robert McDowell, could delay the court's decision on the deal. A petition had been lodged with the Court of Session questioning the Scheme of Arrangement - a legal process whereby one company takes over another.
Lord Glennie will consider the Scheme of Arrangement - a legal process whereby one company takes over another. The last-minute intervention was filed by financial journalist Ian Fraser and economist Robert McDowell.
If approved the new Lloyd's banking group could start trading next week. But after a day-long hearing Lord Glennie granted the orders HBOS sought.
Mr Fraser and Mr McDowell have raised five points they want Lord Glennie to consider. 'Extraordinary deal'
They claim the issues have caused concern to shareholders and members of the public. They also want the Court to give its own view on the matters. Mr McDowell said his motive in bringing the questions to the court was not to disrupt or upset the takeover, but to look at it as an example for the future.
Cash injection He told the court: "I would remind us all of the extraordinary nature of this scheme and general meeting that we are considering, dealing as it does with the takeover of a leading Scottish bank, a national champion, a major part of the financial heights of the economy."
The scheme must be tested in court, independently of any company procedure or media coverage. One of the questions raised was about the decision to hold an HBOS meeting where shareholders voted on the takeover in Birmingham, rather than Scotland.
But David Stellar QC, who was representing HBOS, said it had been the company's practice to change the location of its meetings since 2001 and a substantial amount of its shareholders were in southern England.
Banking group
The court was told that of 650,000 shareholdings in the bank, only 52,000 were in Scotland.
There have been repeated attempts to block the sale of HBOS. The last of these, threatened by HBOS pensioners, has now been withdrawn.There have been repeated attempts to block the sale of HBOS. The last of these, threatened by HBOS pensioners, has now been withdrawn.
Meanwhile, the UK Government's injection of £17bn of capital will be confirmed, shoring up a troubled balance sheet. The UK Government's injection of £17bn of capital is now expected to be confirmed and the new Lloyd's banking group could start trading as early as next week.
No sudden changes are expected in branding or branch closures but the plan is for a cut of £1.5bn from the new bank's annual costs over the next three years, which has prompted predictions of a large number of job losses.No sudden changes are expected in branding or branch closures but the plan is for a cut of £1.5bn from the new bank's annual costs over the next three years, which has prompted predictions of a large number of job losses.