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New Banking Giant
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Lloyds TSB to Take Over Rival HBOS
Writes Hazel Cottrell hazel.cottrell@consumerchoices.co.uk
Landmark takeover would create “super bank”, with around a third of the savings and mortgages market, but may also cause thousands of job losses.
It was confirmed this morning that Lloyds TSB (www.lloydstsb.co.uk) will pay £12.2 billion to take over HBOS. The takeover is intended to create one of the strongest banks in the UK but may result in thousands of employees losing their jobs.
The deal comes after HBOS shares plummeted 70% in this week’s market turmoil, however Eric Daniels, chief executive of Lloyds TSB, claimed the deal is not a “rescue bid,” and said that Lloyds and HBOS had been in touch about possible deals as early as 2001.
The deal is still to be approved by Lloyds TSB and HBOS shareholders, but if it goes ahead, we will see the creation of a new banking giant. The combined business will have 38 million customers, holding around 40% of all UK current accounts and 30% of all outstanding mortgages.
The Financial Services Authority (FSA) has made it clear that it approves of the deal, issuing this statement early this morning:
“The announcement of the proposed merger with Lloyds TSB is a welcome move as it is likely to enhance stability within financial markets and improve confidence among customers and investors in the UK financial sector.”
Ordinarily the creation of such a “super bank” would be prevented under competition rules, but Chancellor Alistair Darling has said that the Government will take steps to overcome competition rules in order to allow the deal to go through, telling Sky News: “Financial stability must trump competition”.
As yet, there has been no indication of which of the brands will survive from the combined group that will own names ranging from Halifax (www.halifax.co.uk) to Scottish Widows. The banks have confirmed that there will be job losses, but dismissed the reported figure of 40,000.
Chris Eagle, commercial manager at Credit Choices says: “This really is a landmark day in the history of banking. Hopefully the combined group will retain the majority of the current brands and continue to offer different products. However, the more financial institutions we see enter into mergers, the more concerned we should be about a lack of competition and consumer choice.”
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