Open

Coming up

Don't miss

Replay


LATEST SHOWS

MEDIAWATCH

No strategy and a beige suit

Read more

THE WORLD THIS WEEK

The World This Week - 29 August 2014 (part 2)

Read more

THE WORLD THIS WEEK

The World This Week - 29 August 2014

Read more

ENCORE!

Alain Choquette: A Hilarious Magician in Paris

Read more

FOCUS

France welcomes Iraqi Christian refugees

Read more

FRANCE IN FOCUS

Emmanuel Macron: A new economy minister with a pro-business agenda

Read more

THE OBSERVERS

More of this year's best Observers stories

Read more

#TECH 24

Changing the world, one video game at a time

Read more

IN THE PAPERS

Socialist Party summer conference kicks off in explosive atmosphere

Read more

  • EU leaders choose Tusk and Mogherini for top jobs, discuss Russia sanctions

    Read more

  • Dozens of UN peacekeepers still held by Syrian jihadists

    Read more

  • Opposition protesters clash with Pakistani police outside PM's house

    Read more

  • Austerity row overshadows French Socialist’s annual rally

    Read more

  • Egypt sentences Brotherhood leader Badie to life

    Read more

  • Ceasfire allows Gaza families to relax on the beach

    Read more

  • S. Africa condemns 'military coup' in Lesotho

    Read more

  • Kerry calls for 'coalition of nations' to battle IS militants

    Read more

  • Ukrainian plane with seven on board crashes in Algeria

    Read more

  • Exclusive: Fabius warns Russia of more sanctions

    Read more

  • IMF backs Lagarde amid French corruption probe

    Read more

  • Ebola drug ‘ZMapp’ heals all monkeys in study

    Read more

  • British killer escapes from French psychiatric hospital

    Read more

  • Police hunt for British boy with brain tumour taken to France

    Read more

  • Ukraine to relaunch NATO membership bid

    Read more

  • Suriname leader’s son pleads guilty to courting Hezbollah

    Read more

  • Mapping Ukraine: Canada and Russia in ‘tweet for tat’ row

    Read more

Lloyds TSB in talks to acquire rival HBOS

Latest update : 2008-09-18

British bank Lloyds TSB is reportedly in advanced talks to acquire its beleaguered domestic rival HBOS, whose shares have plunged amid concern over the mounting financial crisis. HBOS is Britain's leading provider of home loans.

Lloyds TSB is reportedly in talks to buy fellow British bank HBOS, in deep trouble on the stock market amid the crisis engulfing global financial markets, it emerged on Wednesday.

 

The BBC reported that HBOS, Britain's biggest provider of home loans, was in advanced talks for it to be bought by Lloyds TSB.

 

The price of HBOS shares has moved wildly this week, falling by about 50 percent, but then surging on the reported takeover talks, only to ease again.

 

The financial services regulator has said it is fundamentally sound.

 

Spokesmen for both banks declined to comment on the speculation, but the news sent HBOS shares surging higher on markets still reeling from the bankruptcy of US investment banking giant Lehman Brothers.

 

Heavy losses earlier on Wednesday prompted Britain's FSA financial watchdog to issue a statement saying that the group was well-funded, in an attempt to avoid a flood of savers trying to withdraw their money.

 

Prior to the report on the BBC website, HBOS shares had nosedived 52 percent to a low of 88 pence, as investors fretted over the state of the global banking sector despite news of a rescue for troubled US insurer AIG.

 

However, the Lloyds TSB takeover report helped push the bank's stock back into the black, at one point rising to 220 pence.

 

At 1045 GMT, HBOS stock was at 189.10 pence, a rise of 3.90 percent on the start of trading.

 

"Since the beginning of the current extreme difficulties in the financial markets, the Financial Services Authority has worked intensively with all major UK banks to ensure they have credible capital and liquidity plans," the FSA said in a brief statement.

 

"We are satisfied that HBOS is a well-capitalised bank that continues to fund its business in a satisfactory way."

 

The value of shares in HBOS, which was created by the merger of Bank of Scotland and Halifax in 2001, had slumped by a total of 36 percent over the course of Monday and Tuesday.

 

But HBOS has argued this week that it is robust and able to fund itself.

 

It has 258 billion pounds (324 billion euros, 461.5 billion dollars) of savings and the strongest capital ratio, the most common measure of bank strength, of its domestic rivals.

 

Lloyds TSB chairman Victor Blank is reported to have discussed the merger proposal with Prime Minister Gordon Brown, who is grappling with an almost unprecedented period of economic and financial market turmoil.

 

It is thought that an announcement on the deal could come later Wednesday.

 

The BBC said the FSA and the British Treasury would welcome a tie-up between TSB and HBOS "as it will put the bank on a sounder footing".

 

It said that under the terms of the proposed takeover HBOS shares would be worth "considerably more" than their current level of 100 pence.

 

A buyout would create a banking colossus that should be able to cope with the current crisis.

 

It would also give Lloyds access to a larger share of the British mortgage market -- HBOS currently issues one in five of all new home loans.

 

London's FTSE 100 leading shares index also experienced extremely choppy trade on Wednesday. In late morning deals, the FTSE showed a gain of 1.24 percent at 5,088.00 points.

 

Date created : 2008-09-17

COMMENT(S)