By Dipankar De Sarkar, IANS,
London : Lloyds TSB bank took over Britain’s largest mortgage lender Thursday in a 12.2 billion pound ($21.3 billion) government-approved
rescue plan aimed at stabilising a jittery financial market.
The acquisition of rival Halifax Bank of Scotland (HBOS) was prompted by a 52 percent fall in the bank’s shares Wednesday – a day marked by a global market scare and the nationalisation of American International Group (AIG), America’s largest insurer.
Lloyds paid 232 pence per HBOS share, which was worth 147.1 pence at market close Wednesday, and said the deal would add a billion pounds in profits by 2011.
The British government waived its strict competition laws to allow the acquisition, with Finance Minister Alistair Darling saying financial stability “must trump” competition fears.
The deal was described by some analysts as a private sector bailout that had been hurried through after a meeting between Lloyds TSB chairman Victor Blank and British Premier Gordon Brown Monday.
But Lloyds TSB chief executive Eric Daniels said: “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.”
Lloyds TSB said there would be job losses but played down claims that up to 40,000 jobs were at risk. HBOS employs about 72,000 people while Lloyds TSB has a workforce about 58,000.
A bank failure would have had disastrous consequences for the British economy – Halifax, which is part of HBOS, accounts for one in five of every housing mortgage taken out in Britain.
In a country where buying rather than renting is the orm, total property loans at the end of 2007 stood at 253.4 billion pounds.
The Financial Services Authority (FSA), Britain’s independent regulator, described the acquisition as “a welcome move as it is likely to enhance stability within financial markets and improve confidence among customers and investors”.
Business Minister John Hutton said the British government intervened in favour of the deal “on public interest grounds”.
Darling said Wednesday that the government was doing “everything possible at this time… that we help homeowners, we help savers by maintaining the
stability of the banking system.”
The new giant bank, still likely to be called Lloyds TSB, will cover a third of the entire mortgage market in Britain and have 38 million customers.