I’ve had a number of queries about how the Lloyds-TSB + HBOS merger came about.
Here is the Guardian’s ‘take’ on it at the time, September 2008. It makes weird reading now. It omits the inducements and the bullying!
I have more but no time right now!
Christina
=================================
GUARDIAN
18.8.08
Lloyds TSB chairman struck HBOS deal with Brown at City drinks party
The prime minister promised that the deal would not be investigated if the enlarged bank continued to provide funds to would-be homeowners
Lloyds TSB has given the government a pledge that it will keep lending to first-time buyers, in return for assurances that its £12bn bid for HBOS, announced today, would escape the scrutiny of the competition authorities.
Sir Victor Blank, the chairman of Lloyds TSB, revealed that he struck the deal with Gordon Brown at a City drinks party on Monday. The prime minister promised that the deal would not be investigated if the enlarged bank continued to provide funds to would-be homeowners. HBOS owns the Halifax and is Britain's biggest mortgage lender.
Blank, who is to chair the combined bank following the deal, was speaking after Lloyds TSB confirmed that it was taking over HBOS in a "landmark day in financial services history" that is intended to create one of the strongest banks in the UK [!!! -cs] but will cause thousands of job losses and branch closures.
In an attempt to calm concerns about the health of the banking system, the Financial Services Authority made it clear that it believed the deal would "enhance finance stability".
In a statement rushed out immediately after the 7am merger news, the FSA said it was "satisfied that HBOS is a well-capitalised bank that continues to fund its business in a satisfactory way. [This is the very same FSA under the failed Lord Tuerner which got everything else wrong too - a creation of Gordon Brown -cs] 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."
The secretary of state for business, John Hutton, confirmed that the government would override competition law on public interest grounds to "ensure the stability of the UK financial system". [They turned a blind eye to the EU’s ability to intervene which they are now doing -cs]
Blank said it would have "impossible to contemplate" launching a takeover bid for HBOS which then would have been subjected to a 12-month competition investigation. The share prices of both companies would likely have fluctuated widely and the deal may have fallen apart.
The deal was met with a cautious reception in the City. Lloyds TSB's shares fell 8% to 255p on concerns about the future capital strength of the combined bank and the realisation that future dividends may not be as generous. Lloyds intends to pay its final dividend in shares rather than cash to preserve capital.
[- - - - - - - - - Rating agencies detailed cautious approval ]
After barely 36 hours of intense negotiations in the wake of a dramatic collapse in the share price of HBOS, the deal was agreed that will see the combined group run by the Lloyds TSB chief executive, Eric Daniels.
[- - - - - - - details of the deal ]
Daniels said Lloyds and HBOS had been in touch about possible deals since as long ago as 2001 and admitted that in the past competition issues would have prevented the transaction, which he said was now being "expedited" by the government.
Acknowledging that the group was aiming for £1bn of annual cost savings from 2011, Daniels said that "ultimately there would be some job losses".
He gave no figures. The combined business will be headquartered on Edinburgh's The Mound, the main base of HBOS, and will focus on increasing demanding for bank deposits, savings and investments.
Sir Peter Burt, the former chief executive of Bank of Scotland, which merged with Halifax to form HBOS seven years ago, today said HBOS was a "victim" of speculators after a sustained and dramatic fall in shares to as low as 88p yesterday. This deal puts a value of 232p on each Halifax share, well below the 774p at which they floated on the stockmarket in 1997.
Andy Hornby, the HBOS chief executive, who is to stay on at the combined bank in an undefined role, acknowledged these has been "turbulent times" for the bank.
Lord Stevenson, the chairman of HBOS, said: "This is the right transaction for HBOS and its shareholders. Against the backdrop of the very high levels of volatility our industry is experiencing, the combined group will be one of the strongest players in the UK financial services sector. In addition, the combined group will have excellent brands and a very powerful franchise. We are recommending our shareholders vote for this transaction."
It was "a good deal for customers and shareholders," Blank said. "I think we are creating a great British bank." [!!! -cs]
Posts
