Lloyds to take over HBOS
(19 September 2008 – UK) Lloyds TSB, the fourth largest UK bank, has agreed to takeover the UK’s fifth biggest, troubled bank HBOS for £12.2 billion (A$27 billion).
The takeover is intended to address uncertainty about the strength of Halifax Bank of Scotland (HBOS) after its share price plummeted in recent days.
The BBC reported that the deal started negotiation at the highest level, with British Prime Minister Gordon Brown telling Lloyds TSB chairman Sir Victor Blank that it would be helpful if Lloyds could end the uncertainty surrounding HBOS by buying it.
The acquisition will create a UK banking giant which will hold close to one third of the savings and mortgage market in the UK.
BBC business editor Robert Peston said the government had opted to push through the Lloyds TSB takeover of HBOS after HBOS voiced concerns that depositors and lenders had begun to withdraw their credit from the bank.
He added that there were growing concerns in the HBOS boardroom that a climate of fear was being created about its future that could have led to a funding crisis, or a Northern Rock-style run.
HBOS is currently the country's largest mortgage lender with 20 percent of the market. Lloyds ranks fourth with an 8 percent share.
The combined bank will have a total of 3000 branches, 38 million customers, 142,000 employees and a retail savings balance of £204 billion (A$451 billion)
Following the takeover, Lloyds chief executive, Eric Daniels, is expected to take the helm of the new group, with the future of HBOS head, Andy Hornby, unclear.
The BBC reported that the deal started negotiation at the highest level, with British Prime Minister Gordon Brown telling Lloyds TSB chairman Sir Victor Blank that it would be helpful if Lloyds could end the uncertainty surrounding HBOS by buying it.
The acquisition will create a UK banking giant which will hold close to one third of the savings and mortgage market in the UK.
BBC business editor Robert Peston said the government had opted to push through the Lloyds TSB takeover of HBOS after HBOS voiced concerns that depositors and lenders had begun to withdraw their credit from the bank.
He added that there were growing concerns in the HBOS boardroom that a climate of fear was being created about its future that could have led to a funding crisis, or a Northern Rock-style run.
HBOS is currently the country's largest mortgage lender with 20 percent of the market. Lloyds ranks fourth with an 8 percent share.
The combined bank will have a total of 3000 branches, 38 million customers, 142,000 employees and a retail savings balance of £204 billion (A$451 billion)
Following the takeover, Lloyds chief executive, Eric Daniels, is expected to take the helm of the new group, with the future of HBOS head, Andy Hornby, unclear.
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