Lloyds TSB unveiled a mammoth £12 billion takeover of ailing Halifax Bank of Scotland today in a deal set to change the face of UK banking and cause massive job losses.
The acquisition will create a new banking giant with nearly a third of the UK mortgage market, more than £300 billion of deposits and around 3,000 branches - making it far and away Britain’s biggest bank.
Chancellor Alistair Darling confirmed the Government would waive competition requirements to ensure the deal went through, saying it was needed to shore up the financial system.
The alternative was “very bleak indeed”, he said.
The takeover has also been welcomed by UK financial regulators including the Bank of England, although it is still subject to shareholder approval.
Speculation that as many as 40,000 job losses could follow was described as being “on the high side” by Lloyds TSB.
HBOS employs 75,000 people and has 1,100 branches in the UK. Lloyds TSB has about 70,000 staff, with 1,900 branches.
The announcement helped the FTSE 100 Index hold firm today after it lost nine per cent over the first three days of the week. The Footsie was 54.7 points higher at 4967.1. HBOS shares rose 29 per cent to 190p.
The proposed boss of the new outfit, current Lloyds TSB chief executive Eric Daniels, said 10 per cent of the combined group’s costs would be saved. Of the 40,000 job loss estimate, he said: “Undoubtedly there will be some job losses. But I don’t recognise that, it seems on the high side.”
Mr Daniels also rejected accusations the takeover represented a “shotgun marriage” between the firms.
The deal came as a stagnating housing market pushed mortgage lending down to its lowest level for more than three years during August, with £21.8 billion advanced during the month, 12 per cent less than during July and a 36 per cent drop compared with August last year.
By David Burrows
3 Comments
I do find this all rather intriguing.
What exactly is different about HBOS today, than yesterday?
and where does the £12Bn come from - and where does it go?
We are talking about such a large scale takeover of one major player in a marketplace, by another, so all this can really mean, in “real terms”, is some sort of “shoring up” of credibility of HBOS, and perhaps some shedding of overhead in the months to come.
But, apart from that …
so what’s different?
Aren’t the underlying problems still there?
and what about the massive profits the banks made not so long ago ? where has all that gone?
Or is it that it wasn’t “real” in the first place?
And so -
are we now seeing the real picture emerging of an industry that supposedly has made large amounts of money, but in real terms added no value at all to the economy, as manufacturing would have done ?
( perhaps we could liken banks to several large tanks of water, all connected by “leaky” pipes, so… as the water is “transacted” from one place to another .. some leaks away as “profit on the transaction” …. but … as water passes from one tank to another …… the OVERALL level goes down …. AND …..No one (manufacturing industry?) is filling them up again…… so sooner or later …. the tank(s) runs dry.)
Is this a reasonable analogy of what is happening here?
i like the leaky pipes theory as this refers to the millions of pounds syphoned off in bonuses, in the good years, with nothing put aside for the bad old times ie now. hbos was in february worth £11 a share, yesterday morning .80p a share, how the mighty are fallen. those who have received their bonuses can march on to a new job leaving up to 40,000 families facing tough times ahead. another scottish business blown away by greed and madness
Hi Devon Salopian.
I like the reference to £11.00 a share down to 0.80 a share (although I don’t think it went that low
All I can say here is, it this was a REAL business, with a product range, manufacturing capability, design facility, ownership of intellectual property rights, design rights, patents, plant, machinery Skilled staff, property, customer base, and …..
A REAL margin on genuine product sales to a genuine market place - THEN HOW (as a comparison)could such a company become so devalued ? - It wouldn’t! - so what does that tell us about the banking industry ? (A: The banks don’t actually do anything -they just store other poeples wealth creation - and move it around - at a cost -which they mistakenly call “profit” - which is a fallacy.
Surely what this means is that the leaky pipe theory is proved, and that in fact ….
NO ONE was filling the tanks up, BECAUSE there is no one left to do it - and -
“those that do try to make real wealth to fill the tank” get charged a fortune by the greedy banks for taking the risks to do it (try starting a company!!)
Something REALLY needs to change here if we are going to be going anywhere from here.