Lloyds TSB / HBOS merger challenges arise

by Gill Montia

Story link: Lloyds TSB / HBOS merger challenges arise

The hurried £12 billion merger between Lloyds TSB and HBOS may be challenged in the days ahead, with reports that counter bids are being prepared.

A report in Scotland on Sunday suggests that Bank of America, Citigroup, and Spanish bank, BBVA, could be interested in acquiring HBOS, while the Sunday Herald names a group of leading Scottish bankers who are being invited to formulate plans to buy Bank of Scotland.

Lloyds TSB has pledged to keep The Mound in Edinburgh as its Scottish headquarters but the potential impact on the merger on the city’s financial services sector has already led Scotland’s First Minister, Alex Salmond, to attack the Financial Services Authority for failing to act and leaving HBOS vulnerable to speculators.

Meanwhile, HBOS investors are questioning the terms of the all-share deal.

The group’s shareholders will receive 0.83 shares in Lloyds TSB for every share that they own.

However, the offer preceded a record one-day rise in the FTSE 100 on Friday, when markets responded to the news that the US Treasury would be working over the weekend on a recovery plan.

Had the agreement followed this news, HBOS shareholders could have benefited.