Thousands face axe in HBOS merger

 

 

 

Thousands of jobs could be lost in the wake of Lloyds TSB's £12.2bn takeover of Halifax Bank of Scotland (HBOS).

 

While Lloyds dismissed claims that up to 40,000 jobs faced the axe as "ridiculous", it refused to rule out compulsory redundancies.

 

The takeover will lead to cost savings of in excess of £1bn, Lloyds added.

 

Meanwhile the prime minister has said the government is "determined" to maintain the stability of the financial system and protect the UK's savers.

 

Gordon Brown pledged to "do everything to protect depositors in Britain, who need to have confidence in the banking system".

 

The takeover - news of which was broken by BBC business editor Robert Peston - values shares in HBOS at 232p each.

 

Turmoil

 

The deal comes as a crisis of confidence on global financial markets has wreaked havoc in recent days:

 

Gordon Brown said the decision was right

 

* A lack of funding has forced global central banks to pump billions of extra dollars into money markets to boost the amount of funds available

* Russia's main stock markets remain suspended in an effort to prevent a meltdown after steep falls in share prices

* Banks around the world have admitted they could lose millions after the collapse of US investment bank Lehman Brothers

* The US Treasury rescued AIG with an $85bn package amid fears the group, once the world's largest insurer, could collapse

* Bank of America bought Merrill Lynch in a $50bn deal - making it the third top US investment bank to fall prey to the sub-prime crisis within six months

* Meanwhile, in the UK there has been little economic news to lift the gloom, with latest figures showing mortgage lending slumped again in August

 

Effectively the buy-out is a rescue deal as HBOS shares have plummeted in recent days amid concerns for its future.

 

Earlier Chancellor Alistair Darling said the government would allow the HBOS-Lloyds TSB deal because financial stability "must trump" competition fears.

 

 

He added that without the deal the outlook was "very bleak indeed", though he denied the authorities had rushed through the deal.

 

"We were onto their [HBOS's] problem for several weeks. It didn't just suddenly happen," he told the BBC.

 

City watchdog, the Financial Services Authority (FSA) welcomed the merger saying it would "enhance stability within financial markets and improve confidence among customers and investors in the UK financial sector".

 

 

BBC business editor Robert Peston said the government had opted to push through the Lloyds TSB-HBOS tie-up after HBOS voiced concerns that depositors and lenders had begun to withdraw their credit from the bank.

 

Concerns about HBOS's security were so great that even the prime minister was involved in pushing through the deal, our business editor said.

 

"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 - on steroids," he said.

 

 

Under the terms of the deal - which must be agreed by shareholders - HBOS shareholders will receive 0.83 Lloyds shares for every HBOS share.

 

"This will be a unique opportunity to accelerate and extend our strategy and create the UK's leading financial services group," said Lloyds chairman Sir Victor Blank.

 

Market leader

 

Meanwhile, Lloyds chief Eric Daniels was keen to stress that the takeover had not been forced on HBOS.

 

"There shouldn't be any impression this is a shotgun marriage or a forced marriage, this is something that's been looked at for a good long while," he said.

 

Declan Curry goes through the main points of the deal

 

Lloyds added that the takeover was part of its strategy to build "the UK's leading finance company", adding that it also intends to increase the number of competitive mortgages on offer for first-time home buyers.

 

The enlarged group will hold a third of the UK mortgage market, but competition watchdogs will not block the deal as it was backed by the government.

 

However, Lloyds chairman Sir Victor Blank did say the Office of Fair Trading would look "very carefully" at the business if it discovered any market abuses in the future.

 

Following the takeover, Lloyds chief executive Eric Daniels will take the helm of the enlarged group.

 

HBOS chief Andy Hornby will remain with the company, but a decision on his future post has not yet been reached.

 

 

The group also moved to allay fears that the takeover would mean a blow to Scotland where HBOS is currently based.

 

Lloyds said the enlarged group would continue to use The Mound - HBOS's corporate headquarters - in Scotland, continue to hold annual general meetings in Scotland and carry on printing Bank of Scotland notes.

 

 

"In addition the management's focus is to keep jobs in Scotland," it added.

 

According to the deal agreement "significant cost savings can be made by combining the networks and back offices of Lloyds TSB and HBOS".

 

Under the cost saving plan retail branches will be cut, while head office posts, human resources and finance and legal departments will also face cuts.

 

"This is the right transaction for HBOS and its shareholders," said HBOS chairman Dennis Stevenson.

 

"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," he added.

 

 

LLOYDS vs HBOS

Branches - Lloyds 1,900; HBOS 1,100

Customers - Lloyds 16 million; HBOS 22 million

Employees - Lloyds 70,000; HBOS 72,000

Savings - Lloyds is the UK's fourth largest savings bank; HBOS is the market leader

Retail savings balance - Lloyds £65bn; HBOS £139bn

 

HBOS & LLOYDS TSB BRANDS

Halifax

Bank of Scotland

Birmingham Midshires

Intelligent Finance

Sainsbury's Finance

The Mortgage Business

St James's Place Bank

Colleys

Lloyds TSB

Cheltenham & Gloucester

Scottish Widows

 

 

Source: BBC

Anyone else slightly concerned?

 

i have 3 bank accounts with the Bank Of Scotland (HBOS) and am seriously considering moving them to RBS or a bank that isn't on the brink of going bust

no not really... ive seen these merges before.

Whoops my Halifax account

If it was not for the fact that I work in this business sector, then I would feel like posting a rather hilarious riposte towards the Halifax annoyingly awful yet memorable adverts that instantly kill my love for any song they massacre.

 

However, my karma feels that it would not be a smart move to make cheap jokes at other people's future misery with the five fold number of redundancies that will follow this merger.

 

So I'll save my anger for George W Bush's Republican Administration (whom in 2001/2 removed banking safety legislation that was put in place in 1931 to stop another Great Depression / Wall Street Crash (1929)) and therefore allowing banks to lend too much money at rates borrowers could ultimately not pay back and all those short selling Hedge Fund parasites who have since been legally taking money out of the system whilst becoming richer than the Beckhams. :angry:

Does this mean that Howard Brown won't be taking his fish for a walk anymore?

It's Howard Brown I feel most sorry for.

 

F1Mad, please don't move your accounts unless you really feel you need to. If everyone does then we really will be screwed.

 

I have 2 bank accounts and a mortgage with BoS and I'm going nowhere.

The combination of 2 banks cannot be good in the current climate - for a start both Halifax and Lloyds have branches in the same streets and it is ridiculous to suggest there will be no job losses.

 

On another note, I really do hope that the efforts of the UK and US governments to halt futher banking crisis will move a few dominos out of the way before everything else starts to fall.

It's Howard Brown I feel most sorry for.

 

F1Mad, please don't move your accounts unless you really feel you need to. If everyone does then we really will be screwed.

 

I have 2 bank accounts and a mortgage with BoS and I'm going nowhere.

Quite right - people moving their accounts will result in another bank run in a Northern Rock style and will make other banks weaker.

 

The government will guarantee any savings under £35k anyway :P

as I can't be bothered to read the whole thing, what name will they all be under? or are they keeping the names as they are?

 

I'm a HBoS person, and I am quite happy at the moment, and am not going to act like all the fools who queued outside the Northern Rock helping to cripple it further -_-

No name confirmed yet, but as it is a takeover not a merger, is suspect that it will all be LLoyds TSB and HBoS brands will remain as specialist accounts or certain financial servies (like C&G do now under Lloyds).

I'm not rushing to any other bank, hence Northern Rock situation earlier in the year, just see what happens.

 

I guess Howard Brown is out of a job now :cry:

The government will guarantee any savings under £35k anyway :P

 

Then there is some risk of me losing the £857,000.17 I've got stashed away then?

 

Norma

 

 

Then there is some risk of me losing the £857,000.17 I've got stashed away then?

 

Norma

Not if you split your vast fortune under your mattress in different accounts......!

Well I'm not best pleased. Not at all. How can the oldest commercial bank in the UK collapse in 2 days? The Bank of Scotland has been here since 1695 ffs. It's an Institution up here. I've banked with them all my life (and no, that's not since 1695 before anyone says that :angry: ).

 

Its biggest mistake was to merge with the Halifax. -_-

 

I'm just so pissed off about the whole thing. Money grabbing wide boys in the City. They should f***in jail the lot of them... :angry:

 

 

( It'll be excellent not to have that twerp Howard singing on the telly, mind :P )

Then there is some risk of me losing the £857,000.17 I've got stashed away then?

 

Norma

 

Keep that 17p close!

As far as the name goes I think Halifax as a brand are dead and buried.

 

Due to the notes in circulation (not that anyone south of Berwick will accept one!) and its ties with other things, Bank of Scotland will remain for the forseeable future as a recognised brand.

as I can't be bothered to read the whole thing, what name will they all be under? or are they keeping the names as they are?

 

I'm a HBoS person, and I am quite happy at the moment, and am not going to act like all the fools who queued outside the Northern Rock helping to cripple it further -_-

 

Reminds me of an old saying when 2 Companies merge, LLoyds boss says we will take one of our names and we will take one of your names from Halifax Bank of Scotland.................so the new bank will be called LLOYDS BANK :)

There is no doubt HBOS were targetted by city spivs short selling shares they never owned, and they forced the almost destruction of one of the worlds biggest banks. Somewhere these guys are sitting counting up a pile of cash. Shame on them. Any other time this merger would never be allowed.

Halliloyds

Lloydifax

 

:lol:

 

Being a Lloyds customer doesn't have the same ring :(