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Business

HBOS shareholders approve Lloyds TSB takeover

Latest update : 2008-12-12

Crisis-hit British bank HBOS will be taken over by rival Lloyds TSB, according to a partial shareholder vote result. If the deal goes through the British government will end up with a significant stake in the new group.

AFP - Shareholders in crisis-hit British banking group HBOS have approved a takeover by rival Lloyds TSB, according to partial results published on Friday.

"HBOS welcomes preliminary voting indications received from HBOS shareholders ... (which) show overwhelming support for the transaction," HBOS said in a statement as a key shareholder meeting began in Birmingham, Britain's second biggest city.

The bank said it would publish final voting figures ahead of the weekend.

Shareholders in Lloyds had last month backed the takeover and a recapitalisation that hands the British government a key stake in a new company.

In response to the news, shares in both banks plunged -- Lloyds stock plummeted 16 percent to 132.5 pence and HBOS shares tumbled 19.5 percent to 70.5 pence.

Lloyds TSB agreed in September to buy HBOS in a deal worth 9.8 billion pounds (14.6 billion dollars, 10.9 billion euros) after its target was left facing collapse owing to massive exposure to the US subprime mortgage crisis.

Competition rules have been waived to allow the takeover.

"We are very pleased that HBOS shareholders have given a strong vote of confidence for the proposed acquisition, and that they will be in a position to share in the benefits as we create the UK's leading financial institution," Lloyds TSB chief executive Eric Daniels said on Friday.

A combination of Lloyds TSB and HBOS will create a new British banking giant, Lloyds Banking Group, encompassing 145,000 employees and 3,000 branches across Britain.

HBOS, Lloyds TSB and Royal Bank of Scotland received government bailouts last month after they were hit by the credit crunch and resulting financial crisis.

HBOS chairman Dennis Stevenson had warned last week that his embattled bank risked nationalisation should the Lloyds takeover fall through.

He said Friday that he was "neither happy nor proud" about the financial impact of the bank's struggles on investors, adding that the world was experiencing "the most pronounced financial crisis since the Great Depression."

Unions meanwhile protested outside the shareholder meeting.

Rob MacGregor, national secretary at the Unite trade union, said there was concern about redundancies, adding that job assurances "have been few and far between."

Stevenson also came in for criticism from the bank's investors, with shareholder Peter Hapworth telling the meeting: "Let's face facts, it is a bank like yours along with a number of other banks that have caused the crisis in the first place."

"You all went dashing for short-term gain to fulfil bonuses and salaries."

Britain's economy has struggled to deal with the impact of the international financial crisis, with the country teetering on the brink of recession for the first time since 1992 and experiencing the lowest interest rates since 1951.

Date created : 2008-12-12

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