HBOS pensions trustees concerned by merger

by Richard Kilner

Story link: HBOS pensions trustees concerned by merger

The merger between British banking giants HBOS and Lloyds TSB, forged in the heat of the turbulence that has so grievously damaged the financial sector in recent months, could be thrown into peril.

The nine trustees of the HBOS pension fund are contemplating asking a judge to put the deal, which was given the go ahead only with government agreement to suspend competition law, on ice.

The trustees concern is centred on the lack of a commitment put forward by Lloyds TSB to guarantee payments to the pensions fund, which suffers from a multi-billion pound deficit.

On 2 January the trustees will meet to vote on the matter, with any potential legal challenge to the merger occurring on 12 January when the Scheme of Arrangement proceedings take place.

As things presently stand only the HBOS arm of the Lloyds Banking Group (as the merged bank would be known) would be responsible for HBOS pensions, a source of worry for many as HBOS has recently taken multi-billion pounds losses.

The deal has been given the green light by shareholders, but remains open to legal challenges from creditors due to the structure of the merger.