Lloyds TSB jump to HBOS rescue
by David Masters
Story link: Lloyds TSB jump to HBOS rescue
Lloyds TSB today acquired troubled British rival Halifax Bank of Scotland (HBOS) for £12.2 billion.
The all-share takeover is being seen as a bailout rescue for HBOS, Britain’s biggest mortgage provider.
HBOS’s share price fell dramatically this week following numerous crises in banks around the world.
Before rumours of a takeover spread, HBOS’s share price plummeted 52% to 88p as investors sold their shares, fearing the collapse of the global banking sector.
Following the takeover, Lloyds TSB will control almost one third of the UK’s savings and mortgages.
However, competition watchdogs will not block the takeover, because it has been approved by the British government.
The Financial Services Authority said the takeover is a ‘welcome move’ because it will help the UK’s financial market remain stable, increasing the confidence of customers and investors.
Analysts have estimated that up to 40,000 jobs could be axed as Lloyds TSB consolidates HBOS and its own branches on the High Street.
HBOS shareholders will receive 0.83 Lloyds TSB shares for each of their shares, equivalent to paying 232p per share.
A statement from Lloyds TSB called the acquisition a ‘compelling business combination’ that will benefit shareholders and customers alike.
Lloyds TSB estimates that the merger will add £1 billion per year to its pre-tax profit by 2011, most of which will come through cost savings.