The creation of Lloyds HBOS

How on earth can this be a 'good deal' for Lloyds TSB when their shares are now worth pretty much exactly what they were at the start of the day !?

One suspects that Eric Daniels will soon be 'head-hunted' for a stratospheric salary by Citibank...

"But here's the curious irony: in a formal sense, Lloyds TSB's registered head office is in Glasgow (though that's not where any of the action takes place)."

I don't think that is true - it was for a while following the Lloyds / TSB merger [reverse takeover] BUT I'm pretty sure that it has now been officially moved to Gresham Street.

But will Europe competition law allow it? and why 280p, it closed at 148p? Why pay a premium for a distressed stock?

Andy Hornby should do the honourable thing and resign.

He has presided over an unmitigated disaster for HBOS and its shareholders.

So we now have (as of 7 am 19 9 08) HSBC, RBS, Barclays and Lloyds/HBOS.

What price are you giving for merging any of the remaining three high street banks?

RBS/Barclays - unlikely given the ABM Amro history, but possible.

HSBC/Barclays - possible I suppose.

HSBC/RBS - possible but unlikely.

If any other other mergers happen the Bank left out will want to merge with somebody.

Also Will Banco Santander /Abbey/Alliance and Leicester want to be left out?

Will any other overseas Bank muddy the waters?

Let us all speculate!!!!!

Superb reporting today, Mr P

The government have made a hash of the regulatory side of this. Point 4 on the list in your post is all that anyone needs to say on the matter and legislation will just set EC hares running.

It also undermines the regulators, and makes the whole thing smell even worse. There really is no finesse being shown here: only panic.

Are Lloyds-TSB shareholders going to vote for this?

This would be madness on their part. HBOS isnt worth anything, why allow yourself to be diluted buying HBOS shares at a price of £2.80 above their net worth?

Worse, the HBOS balance sheet is full of the worst sort of poison, it has negative value. It will destroy Lloyds-TSB.

The very least you would have expected is some sort of subsidy or guarantee from the government for taking on this sort of risk. LTSB is not big enough to take on this risk by itself. Given that financial markets are imploding as the terms of the deal are being announced, making this deal now seems like the dumbest of moves.

Where is Lloyds-TSB legendary caution when the greatest of all caution is needed?

Barclays did the right thing with ABN AMRO, they walked away when the price was too high. It saved Barclays. When they were interested in Lehman's they didnt get the assurances that they needed from the Fed. They walked away, and are now buying the assets that they want for a song, and leaving the debt to others.

Lloyds-TSB, come to your senses and walk away! You cannot save the financial system with this deal, only help bring it down.

1: Given the general insanity of the situation, why were shares in HBOS not suspended at 9am this morning. It appears clear from the movements in the share price that enough people knew before then that something was up and the market was being manipulated.

2: Have the Government created a rod for their own backs. They have guaranteed Northern Rock deposits - how long before they have to guarantee LHBOS? After all, the overall exposure to the property market hasn't gone away, it's just changed it's name. How long before the shorters switch their targets?

3: Is the government seriously admitting that the economic situation is so bad that it needs to enact parliamentary measures to prop up our high street banks?

4: Being the biggest bank by some measure means that it is almost impossible to stop competition laws being strained. There is obviously going to be a serious amount of overlap as well - how many jobs will go?

5: In the big picture, does this really matter? Couldn't HBOS retain it's identity in the North?

6: Too many chiefs, someone has to go, preferably the ones who thought that investing in US property was a good idea.

What this doesn't answer is what is going to happen to all of the double counting, branches, staff etc. The joining together of two national and huge banks will lead to the maximum incidence of duplication and therefore this is the worst match in terms of job losses.

The HBOS people saying they won't accept forced redundancies is simply pie in the sky talk.

Hi Robert - I would be interested to know how comfortable you feel about you own role in all of this? It seems to have unfolded in a highly unusual way. You yourself seem to have had a role yourself in the execution of the governments plan, rather than being an objective reporter documenting the events.

The national interest over-ride in merger law only covers defence. Not financial mess-ups. I really don't think they've thought this true and think they will need primary legislation.

And Robert's point 4 is wrong too. There are two aspects to competition law. One prevents large firms from exploiting customers. The other one - merger law - prevent anti-competitive takeovers. The Govt is saying that Lloyds HBOS will be subject to the first but exempt from the second. Wrong, wrong, wrong.

Thanks to Robert and the BBC for all the updates during the day.

Its a shame that while the BBC News website works for most hbos staff his blog appears to be blocked!

Robert,

Yet again you seem to getting the juiciest scoops. You are almost driving the market on this with your exclusives (this morning a plummeting HBOS recovered sharply after your exclusive on the takeover talks). So kudos to you for some great business reporting.

As far as the deal is concerned, this has got to be a great deal for LLoyds, with the enlarged group being a real behemoth in the UK market. I think they are getting a real bargain, as fundamentally HBOS is a solid business, though there will be testing times ahead as the UK property market gets worse. However I dont think there are any real issues with the balance sheet and HBOS is more than adequately capitalised. If the price turns out to be 280 even the underwriters of the rights issue will be happy I suppose.

One thing that has really confused me today is the roller coaster the share price of HBOS has been on - even after the merger talks were formally announced. The shares closing at 147, the fear in the market is palpable at the moment. I really hope things settle down soon but I suspect there are more acts in this drama that is being played out at the moment.

This is great that all comments are censored clearly some opinions are more valid than others.

Surely the next move is for Royal Bank of Scotland to be absorbed.

The deal ain't done yet. I fully expect Lloyds to either pull out or gazunder that 2.80 to substantially less. Half that for example.

Lloyds can tell HMG to take a hike too. They're no charidee. They can buy the bits they want like Barclays did with Lehmans at knock-down, cheapy-cheapy Asda price after PWC (or whoever) gets called in.

According to The Times, Gordon Brown first raised concerns about HBOS with Lloyds on Monday night. But HBOS shares didn't start to tank until Tuesday, and it was only the downward spiral in their price that caused widespread concern about its viability. This raises two questions:
- Why was Gordon Brown concerned about HBOS on Monday? At that point, it was (correctly) regarded as a strong institution.
- Did Gordon Brown create this crisis by starting a rumour about HBOS?

HBOS moves its head office to London
G Brown retruns to Scotland defeated, almost sounds like a fair swap

A dreadful long term solution to a temporary problem. If the bank is solid as is claimed, it will cost the government nothing to underwrite the deposits itself, and hence Lloyds is not actually adding anything of value. HBOS supposedly already has plenty of capital.

Instead it hands to Lloyds - on a plate - a license to make excessive profits from our mortgages in the future, long after stability is restored.

It is difficult to prove that a bank is behaving anti competitively. Hopefully the competition authorities will quickly set in motion similar actions as those against BAA, and split it up again at the earliest opportunity.

This was brought about by 'short selling', which is where 'A' borrows shares from 'B', sells them aggressively, then buys them back at a lower price, then returns them to 'B'. 'A' has made a huge profit, while 'B' ends up with its whole holding of these shares permanently reduced in value, destabilised, and falling further.
My question is, who on earth would be a 'B'? Even if they share 'A's profits, they bear 100% of the fall in price.
Also, I hope my pension fund managers are not 'B's....

Presumably HBOS (as Bank of Scotland) will retain its own banking licence - they have to remain as a bank registered in Scotland to retain the right to print banknotes. That was the reason last year's reorganisation saw Halifax become a division of BoS and not the reverse.

Scots will be hoping that Lloyds registered office is in Glasgow, because, as I understand the Law, if the head office of the new group is more than 100 miles from London, Bank of Scotland will no longer be able to issue its own banknotes.

Why does this merger make a super-bank and why is a super bank any better? It all depends on confidence and who can have confidence in any of them in these times?

Why hasn't anyone interviewed the Money Reform Party on this?

again more price sensitive information being leaked to Peston by someone. This is quite possibly illegal.

This market manipulation must stop. The FSA are a total joke and always have been.

#14, of course some opinions are more valid than others! For example, ill-informed, biased and reactionary opinions are not as valid as well-informed, dispassionate and measured ones.

However, it's just possible the posts were removed for abusiveness, given the absurdity of many of the opinions that have been allowed to remain...

Robert, v good work you're doing - busy chap! Just one thing though, you say:

"But here's the curious irony: in a formal sense, Lloyds TSB's registered head office is in Glasgow".

Yet on the Lloyds TSB website it states:

Lloyds TSB Bank plc Registered Office: 25 Gresham Street, London EC2V 7HN .

Lloyds TSB Scotland plc. Registered in Scotland, number 95237. Henry Duncan House, 120 George Street, Edinburgh EH2 4LH.

So two formal head offices. Yet 'Lloyds TSB Scotland plc' seems to be a wholly owned subsidary of 'Lloyds TSB Bank plc'.

According to The Times, Gordon Brown first raised concerns about HBOS with Lloyds on Monday night. But HBOS shares didn't start to tank until Tuesday,

Faaaaar more likely is that talks had been going on between Lloyds and HBoS for weeks and GB only found out on Monday.

From there the curse of Jonah Brown took over.

Look Rob, I don't know where you get your information, but I don't like it.

Kid, you're on a roll. Enjoy it while it lasts, 'cause it never does.

As an hbos employee can i humbly request that Andy "George" Hornby does the decent thing and collects his fat pay-off cheque and goes? Him and his ex-Asda cronies have driven the bank into the ground.

(btw Andy saying "we are strong" 50 times on the intranet does not equate to good communication. It smacks of not knowing what to do next).

Benny Higgins must be sitting down to a nicely chilled dish of revenge tonight. In the knowledge that the man who sacked him (for reducing market share, eh ... and exposure to risky deals) has presided over the terminal demise of a 300 year old institution.

Robert

Your blogs are superb, but your hedging and careful choice of words this morning on BBC broadcasts (reflected in today's blogs) about the security of investors and the dangers to investors were couched in terms of someone who was mindful of the run on Northern Rock (and who is accused of having caused it) ... and now the same has happened to HBOS. Do you hold any personal interest in these companies...?? Sorry to raise the question, but let's be open about this as I am sure you will be.

Thank you!

Lloyds TSB Group plc registered office is Edinburgh, not Glasgow. They made a big thing of this when the took over Scottish Widows, but ALL the power in the banking arm is in London.

That said, they've stuck with Scottish Widows and grown a much bigger and better business unit, with by far the largest part of its management still in Edinburgh, but subject to Group rules, regulations, direction and oversight from London.

For the Halifax and B of S business units, Lloyds TSB has plenty experience of merging two banks, and I expect them to consumed by Lloyds TSB. I'm not so clear about the HBOS Asset manager (Insight Asset Management) and their investment, savings and life assurance business. They could all be integrated with Scottish Widows to keep the politicians happy with jobs and management within Scotland.

Robert,

Do you feel at all guilty that in many ways you (and your colleagues) are responsible for much of this?

Your frantic scaremongering of the last few days has led directly to the gulible and naive rushing to the bank to get "their" money safely back under the matress before the Stock Market eats it.

So then your prophecy of a bank having problems becomes self-fulfiling, and another institution disappears forever, doubtless taking many jobs with it.

Still, it got you a few more "eyeballs" on your blog, eh?

Nothing is solved by this "merger" / forced marriage / dog's breakfast. The speculators will simply move onto a new target and the next round of instability will start.

Personally, I'm off to buy a bow and arrows, 200 packets of dried food, a torch, some batteries and a manual on how to skin rabbits.

See you all when civilisation returns.

Robert,

Lloyds TSB is actually registered in Edinburgh, not Glasgow. Its registered office is the former TSB headquarters at Henry Duncan House, 120 George Street, Edinburgh. But this means virtually nothing.

You're spot on about Scots being furious about what has happened.

But the anger is not so much directed at the deal itself - after all HBOS probably faced three alternatives following the 95% collapse in its share price by 9am this morning (which signalled investors had lost all confidence in its management). These were nationalisation, takeover by a more solid and better capitalised rival, or inevitable bankruptcy.

Alex Salmond is directing his ire at the spivvish short sellers who hastened HBOS's demise.

However I think this is misdirected. Most Scots are much more angry with the bunch of imprudent idiots who effectively destroyed a once great Scottish bank since its 2001 merger with Halifax.

If anyone thinks HBOS is in safe hands with LloydsTSB I suggest they look at BBC1's "Real story reveals banks reckless lending practices" published on Tuesday 10 May 2005 by Paula Denardo. LloydsTSB lending book has many unaccounted for reckless lending cases where through pressure selling they lent to people who had no possibility of repaying. So far they have managed to cover this up!

i think this whole discussion about competition policy is a big red herring. clearly everyone (even in brussels) will understand that the merger is necessitated by circumstances. nobody will want to raise an objection in the current conditions. the government of course will pass whatever legislation is required to legally finesse the solution. but once the dust has settled and it is safe to start thinking about the long term again, i have no doubt that lloyds/hbos will be required to spin off some of its newly acquired businesses and shrink its share of the mortgage market to a more acceptable level.

Re point 5 ??????

Lloyds TSB main office is also in Edinburgh Robert. Just like HBOS.

Dear Mr. Preston,

There a few comments that I would like to make:

1. It is quite amazing that the FSA made comments of confidence when HBOS had a funding gap of £197bn, a large portion that require funding in less than 12 months.

2. It is also quite amazing that the CEO, Andy Hornby, could not address this problem. HBOS has a large asset-backed security portfolio that sucked up funding, which should have been divested away when the US banks were starting to sell their positions off.

3. Even worse, the blame could possible be laid at the feet of Sir James Crosby. The demutualisation of Halifax, orchestrated by the then CEO Mike Blackburn and Chairman John Foulds, had a continuing business plan to becomes more of an investment bank. This would have balanced the funding and business investment better.When Sir Juames took over, he returned more to the previous business model prior to demutualisation. This resulted in a disadvantage because mutualisation offered more efficient funding to that which Sir James was turning to. As such, any advantage that could have resulted from demutualisation had been lost. The merger with Bank of Scotland only delayed the issue because of the size of the Bank of Scotland, its asset-backed portfolio and the adherence to business model undertaken by Halifax.

5. Lloyds TSB has been struggling to make a mark in the market over the last few years. It has actually benefitted from its relative procrastination.

KD

Work must be fun for you these days Robert!

Since every £ Lloyds gives to the shareholders of HBOS for the pleasure of ownership is a £ less that Lloyds will have to fight for the survival of the combined group, I hope it pays 147.10 a share, the market value.

I am staggered by the negative comment on this blog surrounding HBOS and Andy Hornby. They do not have a balance sheet "of the worst sort of poison" and Andy Hornby has run the bank conservatively and well, sticking to the Halifax's core strength - mortgage lending.

Criticism should be aimed at a spineless and clueless Government that has neither the wit nor the resolution to stop speculators causing panic in order to profit from the damage. These speculators are the 21st century's wreckers, causing disaster and misery in order to profit.

After Gordon Brown allowed panic over Northern Rock, causing the first UK bank run since the eighteen hundreds he created an atmosphere where even well run banks can be brought down by rumour and short selling. The Government should resign.

If it means not having to put up with those dreadful Halifax adverts any more, then this makes the whole credit crunch worth the suffering..

As a small shareholder in a different financial services company, I find this all depressing. The information asymmetries have got to the point where a private individual cannot invest directly in the stock market any more. An HBOS shareholder is subject to the whims of hedge funds, unlateral action by government and speculation from media commentators that in other times would be considered insider information.

Small shareholders have no chance to sell at a fair market price.

On the Lloyds registered office front -

1. Lloyds TSB Bank plc Registered Office: 25 Gresham Street, London EC2V 7HN . Registered in England and Wales no. 2065.

2. Lloyds TSB Scotland plc. Registered in Scotland, number 95237. Henry Duncan House, 120 George Street, Edinburgh EH2 4LH
So it would appear the Glasgow office is NOT the registered head office .

As an HBOS staff member of over 15 years i can honestly say the atmosphere and moral in a main office in Glasgow today was horrible largely due to the complete lack of information available to us from HBOS .

The usual "no comment on press speculation " was wheeled out and the only communications to staff were of the "HBOS is a strong bank " variety which have been communicated daily for the last week or so until they finally admited around 1 that they were in talks .

Most staff were on the internet trying to gleam as much as they could from news sites however as one previous comment stated this particular blog had all access barred however most blogs are barred to office staff )

Lets hope that once again the staff and scotland arent the ones to suffer yet again from redundancies , the claim that no forced redundancies will be accepted isnt filling the staff with confidence as recent "staff displacements " as they now prefer to name them have caused major upheaval and distress to many in Scotland .

1. At what point will the shareholders get a say in this very dodgy deal?

2. What is the job of the FSA and the Bank of England if Gordon Brown can stuff everything up?

3. The timing is astonishingly suspect. Just before the Labour conference. The Taxpayers got hosed last time Labour's neck was on the line with Northern Rock and the election that never was. The national interest clause probably just concerns defence matters. The enabling act passed by this Government that was soundly criticised outside Westminster will also play a part. Seems this time the taxpayer's money is safe but the rule of law is not.

Three cheers at the demise of Halifax!!!

Lloyds TSB is a far, far better run bank and mortgage provider.

As an erstwhile customer of Halifax their service was abysmal, their mortgages grossly overpriced, inflexible and badly managed.

Their retail banking division deterred and lost customers in droves by their arrogant banking practices.

Their nonsense, so called house price surveys have been extremely misleading and inaccurate for years, even back to the last housing market correction, 1989 -93.

Halifax posed as an authoritative source of information about housing market data. Nothing could have been further from the truth.

Once a respected mortgage provider, the Halifax fate is richly deserved and long overdue.

Let's hear no more of the Halifax house price surveys.

After looking a bit more closely at what is happening with Lloyds TSB and HBOS it was interesting to hear that the Bank of England is actually swapping mortgages for cash to facilitate this merger.
If these are the questionable ones that have led to HBOS demise I think someone has to come clean over what the taxpayers liability really is and how much these assets will truly realise at the end of the day.
Honesty is the best policy and is acceptable to everyone if it's in the interests of the country as a whole.
Northern Rock has certainly not been the best example of keeping the public fully informed
Private and public companies have to prepare regular trading statements for their shareholders so taxpayers should have statements of how their money is being used to help these companies.
It's the lack of information that breeds distrust between voters and governments.

As an LTSB shareholder I am wary about this proposed merger.
Why are they thinking of merging with a bank tarnished with toxic debt, when the Geiger counters are still clicking like castanets on speed?
I bought LTSB because they were a boring, low risk, safe company paying an excellent dividend income. This merger talk is like your pensioner grandfather suddenly declaring that he wants to take up bungee jumping!
To cap it all, news of GB’s involvement is like the kiss of death.
Walk away Eric, you offered to take on Northern Rock last year but they wouldn’t support your bid, with GB even denying you had made any offer in a subsequent PMQ – and he didn’t even blink whilst doing it.

The shorters are already lining up RBS for a pounding, don’t have them swivel their sights onto an LTHB sitting duck.

I have savings in both Halifax and Lloyds, totalling over the specified limit of £35,000. As they will become just one entity, should I close down one of the accounts and put it somewhere else?

I received and made a number of calls his morning whilst watching the movements of HBOS shares - "must be one-way bet" was the general consensus while HBOS were at 1.02 or thereabouts ...and you were breaking proposals for a Lloyds merger.

Surely whoever was feeding you this info was using insider information and creating a false market?

Congratulations on your keen reporting, but I am glad I didn't dive in. Your blog at 4.46 suggesting an agreed price of £2.80 is surely bordering on the misleading...?

I am a private investor - and I dont like what's going on here.

OH NOES DON'T MOVE OUR HEAD OFFICE - ALL THE POWER HAS FLED SCOTLAND!

Seriously if people get het up over that they really need to get out more.

This report from just over a year ago probably goes a long way to explaining why HBOS is being taken over and in such a hurry. Look at its exposure to US assets, which will be even worse, now, but this will add to Lloyds TSB's exposure.

https://ftalphaville.ft.com/blog/2007/08/21/6731/hbos-the-latest-abcp-victim-insists-it-will-weather-this-squall/

ROBERT,
DO YOU FANCY TAKING OVER A BANK OR TWO AT A KNOCK DOWN PRICE, WELL WE CAN.
FIRST YOU PICK A BANK THAT HAS LARGE AMOUNTS OF EQUITY OWNED BY SMALL INVESTORS AND STAFF.
THEN ALL YOU NEED TO DO IS GET YOUR BUDDIES TO SHORT SELL A BANKS SHARES TO A POINT THAT CAUSES PANIC.
THE RESULT IS THAT ALL BANKS WILL BE SO SCARED TO DO BUSINESS WITH YOUR TARGET BANK THAT THEY REFUSE TO LEND AND DO BUSINESS AT STANDARD RATES CAUSING YET MORE PANIC.
THEN YOU MOVE IN GETTING THE BUSINESS FOR NEXT TO NOTHING.
THE BEAUTY OF IT IS EVERY BANK MAKES MONEY AT A TIME WHEN THEY MOST NEED TO.
OUR NEW BANK HAS ASSETS WELL ABOVE WHAT WE WILL HAVE PAID.
WE COULD OF CAUSE SACK LOADS OF STAFF AND MAKE SAVINGS THEIR OR SELL THE BUSINESS ON TO OUR BUDDIES IN PRIVATE EQUITY IN A COUPLE OF YEARS FOR A HUGE PROFIT.
IN THE FUTURE WE CAN CHARGE WHAT WE WANT TO WITH THE REMOVAL OF A LARGE COMPETITOR OR TWO.
THE COLLEAGUES AT FELLOW BANKS THAT UNDERWROTE THE RECENT WRITES SHARES ISSUE WILL GET THEIR MONEY BACK PROBABLY WITH A SMALL PROFIT.
THE DIRECTORS GET NICE BIG PAY OFFS.

THEIR IS THE PROBLEM OF THE SMALL INVESTORS AND STAFF WITH LIFE SAVINGS OR RETIREMENT INCOME SAVED IN THEIR SHARE HOLDINGS, BUT WHO CARES ABOUT THEM?

THE BANK OF ENGLAND COULD STEP IN AND SUPPORT OUR TARGET BANK AT NORMAL BASE RATES BUT THEY WILL PROBABLY ALLOW THE DEAL THROUGH WITHOUT REALISING WHAT HAS REALLY HAPPENED.

THE FSA COULD LAUNCH AN INQUIRY BUT WILL BE MORE FOCUSED ON THE POTENTIAL OF A MELT DOWN.

ALL WE NEED TO START IT ALL OFF IS A JOURNALIST THAT WILL REPORT IT ALL IN THE WAY WE WANT.

"There were growing concerns in the HBOS boardroom that a climate of fear was being created about its future, that could have led to a funding crisis - or a Northern-Rock style run, on steroids,"

Will you hold your hands up Robert and admit some responsibility for this climate of fear. Some of your reports are clearly inncaurate (e.g. registered address of Lloyds TSB and the idea that the BoS name will disappear - far too much money is able to be made on issuing banknotes on the BoS banking licence) and your constant scare-mongering rather than responsible reporting is irresponsible. People, for some reason, actually listen to you.

What will Robert "bank-breaker" Peston's next target and exclusive scoop be?

Is that why Gavin Davies was flying to Edinburgh yesterday?

#3 The answer you're looking for is that Morgan Stanley underwrote an HBOS rights issue at 275p only 3 months ago. If this take over goes through at less than 275p Morgan will take a huge hit on their balance sheet.

Our Dear Leader will not allow, directly, any deal he has brokered to harm his American friends.

But, if I were a Lloyds exec... I wouldn't want to be paying over 200p max. Taxpayer to the rescue anyone?

PS: the USA...the FED ...is broke! If Morgan and Goldman goto the Wall... and that's the current bet on The Street... they will go to Chapter 11... The credit rating of THE USA is under review, it's AAA+ rating 'is not a God given right' ...Standard and Poor.

I have today created a petition on the PM's e-petition site requesting him to intervene to protect HBOS from this unnecessary merger.
It has not been activated yet and may be late but a hefty number of supporters might give the PM something else to think about. If posted it will be in the Economics and Finance section.
https://petitions.number10.gov.uk/

Will any of the short selling stockbrokers go to jail over this?
Their actions are financial terrorism!
Can the FSA prove itself.

The registered office of a Scottish or English Company cannot be transferred to another jurisdiction. So Lloyds TSB Group plc registered office will always be in Scotland.

In situations like this, the entire board of the aquired Bank should be ditched, especially if the taxpayer is, in any way contributing or underwriting the transaction.

By defintion the board have exhibited dissapointing (I am being reserved) stewardship and to allow them to remain hardly makes one confident.

It all smacks of dishonesty.

If the Lloyds takeover of HBOS takes place this will be yet another demutualised building society to go.
Northern Rock , Abbey , Alliance and Leicester and now Halifax. Have these companies with their new found financial freedom contributed to the current mortgage nightmare ?
Bradford and Bingley next to complete the set and put an end to this deregulation cock up.

I am finding all this very hard to believe:

1. (with respect) That Robert Preston was in a position to receive this news in advance of the insiders in the city viz-a-viz the share price plummeting to £1.00 shortly before his announcement rather than it increasing towards £3.00.

2. That the market was sceptical about this "merger" all day such that the share price never exceeded £2.00 despite the apparent sale price being nearer £3.00. Any near certainty of this merger would probably have resulted in a closing price nearer £2.50.

3. That Lloyds TSB would pay anywhere near last weeks share price of £3.00 without pressure or a significant incentive from the authorities/government.

The market is usually a very reliable indicator and if a £1.50 closing price for a £2.80 merger is any indicator, then I suspect there is much more to this story than we are being told...

Essentially, I suspect that there is far more to this merger with respect to government involvement/interference than is immediately apparent. Isn't it curious that as soon as the market appears to be falling off a cliff that there is an item of news in the UK or US that distracts the market temporarily?!

#11 - you say that national security is is the only public interest override on the Competition Commission power. That is the only public interest consideration on the face of the Enterprise Act 2002 as enacted, but section 58(3) of the Act allows the Secretary of State to make an order insert or deleting public interest considerations.

So Robert's right - secondary legislation will do the trick. But I think that it might get a debate - an order under that section needs approval by both Houses of Parliament before it can have effect.

Just when we really need Bremner,Bird and Fortune to lampoon all this financial mismanagement and gloom they are nowhere to be seen! Such a pity because they could have had a field day.....and given us something to smile about wryly if not actually laugh out loud?

This week I signed off a litigation matter with HBOS, confidential terms. I am an experienced Chartered Accountant. In the course of the litigation I wrote directly to Andrew Hornby in March and April 08 advising him in detail of the glaring strategic errors in the business and obvious solutions that would maintain shareholder value; either immediately back into a better controlled UK bank which does not have a broken business model or commence a break up strategy to break up the dysfunctional hybris BOS and Halifax and return money to shareholders by extracting premium in each business unit such as overseas, ESURE, Birmingham midshaies etc etc and ringfence old BOS and old halifax back to what they were. My comments were not acknowledged other than by general courtesy and in fact ignored as I had expected, What a pity given the bank's subsequent actions have cost shareholders many billions and many employees their jobs; let alone the knock on effects. If responded to and actioned at the time- as with Lehman- it would have preserved share value at a normal level rather than the basket case solution now via not confronting the truth, and a sale expected at massive undervalue. The problems of HBOS's senior management experience/suitability?? to run an international bank ( not a Building Soc aka Halifax ) are obvious as is the business model risk which the strategy implementation has created. The cost to ordinary shareholders and employees is a disaster in the making and I wonder if a class action against senior directors would bring some governance to the situation? Mark Evans [Personal details removed by Moderator]

Robert

i tried to move a large amount of money from Intelligent Finance (HBOS) yesterday, I paid extra for same day. The money has still not arrived in my National Savings Account and they tell me that the Bank of England have blocked the transfer and are holding my money, have you heard of any similar issues?

Well, it couldn't last really. The figures being bandied about is mind blowing. Trillions of dollars, banks panicking, people insecure, but at the end of the day, its all our fault. We borrowed shed loads of cash and the great money train went trundling on the rainbow of glee until it hit the end of the line. And it hit big time.

Things went wrong, it started last year and no one seemed to either care or notice, and we still went steamrollering into financial oblivion.

This merger wont be the last, the governments of the whole world will have to bail out more and more banks and lenders so that the voters don't go homeless and penniless. And sadly yet again, its us who will pay in the long run.

The train has seemed to have changed into a roller-coaster, and its a scary one too, it will touch every single person on the planet.

Meanwhile Barclays does get to cherry pick the tasty bits of Lehmans for under 2 billion. All in all, not as bad a day as it might have been viewed from this side of the pond.

Well the Fed pump in billions into AIG what happens? The Dow Jones is in free fall. Tomorrow should be interesting........ So much for the free market driven by the sheer arrogance and greed of the bankers.

Not a penny of taxpayers money should be used.

The government haven't a bloody clue what to do blaming everyone but themselves.

Brown put the FSA 2001 Act in place - its failed and he has failed - big time.

So what about our pensions, jobs and a secure future? Bailing out these companies wil lonly lead to more pain further down the road and the UK won't have any cash left.

This could happen tomorrow morning.

Market does not like deal. Big sell off of Lloyds shares, that then fall sharply.

Deal value therefore is of less value to HBOS holders.


Lloyds shareholders will then be reluctant to approve the deal.


A vicious circle.

I'm not sure where the headquarters of National Australia Bank are but if the Clydesdale can keep issuing notes I'm sure that Lloyds TSB will manage to do the same.

Not too long ago you were on late night tv interviewing - rather fawning up to - the head of HBOS who said that the problems would all go away in 18 months - yea well his problems have all gone away . His shares have held up so he can buy all those things the rest of us can't . Had you been really on top of things you would have seen this as a portent of things to come . As always the rest of us poor mortals have to make do with the the soothsayers at the Temple gate.

Once again speculators, the government and media hype have combined to defraud investors. These shares were deemed to be worth around £10 one year ago, the board themselves told investors they were worth £ 2.75 just a few weeks ago and now we are supposed to believe that they were only ever worth £2.32. Lloyds are doing this because they get a merger that would never normally be permitted and get the assets at a knockdown price. The housing market may well be sick but the assets behind the HBOS balance sheet have not declined 70% in the last 12 months or has the housing market been badly misreported? This is a re-run of the Northern Rock rip off where shareholders were mugged by the government the only difference is that this time it's a takeover by another plc. Well done Lloyds TSB, shame on you Andy Hornby et al. Meanwhile Nero Darling fiddles

The world of government is going mad-in sheer panic.
Allowing a mega merger such as this not only undermines competition but sets up a pontially even bigger disaster in the future.
we have already seen that the government and financial regulators have let the existing fiasco happen-unfortunately our leading financial institutions are truely capable of exercising great risk for greed.
Let this merger take place and we only need this merged institute to shall we say "mess up" and we have singularly total disaster.
when is the investigation of the existing debacle going to take place and measures put in place to prevent future happenings, and surely before panic mergers are approved!
Oh by the way Gordon Brown was the fiscal minister during the false boom.

232p is probably 2p more than Victor Blank wanted to pay. He is a better banker and a better negotiator than Dennis Stevenson. It is as simple as that.

Thanks HBOS - the outside world knew what was going on yet your staff were kept in the dark as usual.

Robert Peston

You are to be congratulated not only for being first with the news, but also for preventing the demise of HBOS from turning into a rout for the UK banking sector and economy.

The action of Lloyds has prevented a drama turning into a crisis, your timely reporting averted a catasclysmic event for UK banks and the economy.

I think Michael Burk should be ashamed of himself tonight. I speak on behalf of all B of S employees who spent their lives working for this bank only to be sold out by Burk for short time self centred gain

As an HBOS employee, I sit here in total bewilderment. Even as a financial adviser neither I nor my colleagues saw this one coming before yesterday when we knew something was amiss.

I never thought when I woke up this morning I'd go to bed as a LTSB employee. Quite frankly it's devastating.

So for all of you savers and investors out there, dont worry, your money is safe. We would love to say the same about our jobs.

And you won't bother asking about that.

Dr. Doom and his predictions for the US are
here.

Having watched todays events unfold, I am left with a rather interesting question.

Why was the market not told about events that a BBC reporter seemed to know about? ie that HBOS was in talks with Lloyds.

HBOS made its announcement around 1pm (I think). So inside information was leaked early? Will anyone be looking at the trades today? Afterall someone who sold HBOS at a low price this morning might be a bit put out if he wasn't told.

I would be interested in a BBC response.

I am disgusted at the sell out of HB of S shares to LLoyds T S B I hope Mr Burk is having a very sleepless ningt as he is responsible for the demise of a great Scottinsh institution

I'm confused, the Investor Relations page at hbosplc says nothing of any recent events. The last thing I read was a presentation of 3rd Sept [Unsuitable/Broken URL removed by Moderator] So that I am better informed can anyone tell me what there is in that presentation that justifies the dramatic fall in the share price or the need to rush to being taken over. I must be missing some vital understanding of this presentation as it would surely be the truth as seen by the Director for Investor Relations at the time it was made. It leaves me wondering which is the next weakest link, or whether speculative greed and fear are now such that whatever business is targetted will fall. Against this background I'm slightly surprised that the gold price has declined over the past 3 months.

so when do the shareholders get to vote on this?

What really erks about this deal is not that it is happening, but that Lloyds were prevented from taking over Northern Rock last year, on competition grounds. A take over that would have much reduced the impact of the credit crunch within the UK, because there would not have been such a run on Norhern Rock and would have resulted in a much smaller entity than this one. When will Governments learn not to meddle in things they know little about. From the beginings of time they have continued to do the same and to make everything worse. From a group of Russian Jewish Emigres (Lenin and Trotski) leading a revolution to remove the threat of Tzarist Pograms on Jewish people, which resulted in the coming to power of Stahlin and his murdering 12 million Jews, to US backing of Sadam against Iran's Ayatollah, with the outcome that we all know. Governments and the men in them always get it wrong.

I've just fired off an email to the European Union Competition people complaining about this merger. Hopefully the chairman of the other high street banks will be active in lobbying to the appropriate authorities.

But the fundamentals are sound....

Please excuse me if I break this post up. Apparantly I'm trying to post profanity...

41. "After Gordon Brown allowed panic over Northern Rock, causing the first UK bank run since the eighteen hundreds he created an atmosphere where even well run banks can be brought down by rumour and short selling. The Government should resign."

Fantastically put!

What has the government done in the past year, just when economic leadership was needed?

"Passed some controversial anti-terror legislation," is pretty much the only answer that comes to mind.

Thing is, we have a Prime Minister who's reputation is built on the fact that the world was enjoying a good patch. China made things, we bought them, China made more things and so we had high growth and low inflation.
On the whole, a pretty nice boom - Yes, the one we were promised wouldn't happen.
Ooh, and look, here's the bad bit we were promised would never happen either.

What a solid foundation for an economic reputation!

What will happen to Howard? Hopefully he will be sacked and never allowed to make an advert again...

...continued...

As soon as the luck runs out, what has the government actively done?

I personally thought they were pretty good in their dawdling over Northern Rock. Its always best to explore the options and come to the best conclusion - they did IMHO.
This time however... you get the impression this got as much brain-time as my choice of socks did this morning.

If Government had acted after Northern Rock, bringing in measures to increase confidence and transparency in banking maybe we could have avoided this mess.

Come to think of it, they could have fit a pressure release valve to the housing bubble at any point in the past 6 years. That's what we call a "missed opportunity" folks!

I work for RBS; maybe the government could get their act together before the short sellers realise that any bank that has had to make large write-downs and consolidate its' position is easy pickings. I don't really want to work for HSBC/RBS/AB(N)NatWest - too bard to pronounce - let alone be applying for a mortgage with them and only having Lloydyfax TSBOS or NationsBuildingSocietiesRus (currently Nationwide and misc.) to offer me an alternative.

Clegg might have made a load of unfunded promises today, but I have to say, the idea of having Cable in No. 11 makes the Liberals look quite attractive right now.

I suspect the trouble caused by Northern Rock being allowed to fail would have been chicken feed compared to the trouble if HBOS had gone down.

It just makes me nervous to see 'super-banks' created at this time. What if the current environment gets even worse - could the massive mortgage exposure of HBOS then take Lloyds TSB with it?

Have we created a monster that the country simply could not afford to bail out.

This comment was removed because the moderators found it broke the house rules. Explain.

What a bargain! Why did the Government not allow Lloyds to buy Northern Rock a year ago for £30bn. This would have saved the taxpayer £100bn in loans and guarantees. Had it done so, the UK would have been "ahead of the game" regarding calm intervention instead of dithering policital indecision.

If Barclays pick up the best bits of Lehman, then perhaps the balance of banking power, might, just might, be shifting towards the UK.

Light at the end of a very long dark tunnel???

Can the Bank of England legally lend money through a revision to the SLS to include new mortgage assets? Is the only reason it will not do this ‘moral hazard‘? If they can, which would have removed the fear and uncertainty surrounding the solvency of HBOS over the medium term, then they truly are a bunch of central bankers. We continue to criticise the banks for having some huge failure in their business models, imprudence etc. Surely it is now patently obvious that this is a systemic problem, the blood supply is being cut off and it is only a matter of time before they all fall down.
If house prices fall say 30% how many of the current banks will fail? An increase in defaults, the reduction of loan to value ratios, no mortgages will be issued, credit ratings through the floor, no funding from wholesale markets, probably all of them? I know lets fiddle around with stamp duty a bit that’ll boost the housing market(in Scotland) which in turn will avoid a complete meltdown in the financial system.

This comment was removed because the moderators found it broke the house rules. Explain.

There is nothing in this deal for Lloyds but being burdaned with the debts of HBOS. The board are mad. Lloyds was the clean bank that was going to clean up the quality business. Why throw away that opportunity.

Robert: here’s a question on behalf of anxious savers. Do you think the financial services compensation scheme is going to be increased to £50,000 and, if so, when? Lots of mentions of this possibility this week but I’ve heard nothing definite.

Very nice deal for anybody who had insider knowledge, whom might have started the initial panic of shorting HBOS but subsequently were buying the shares cheaply all day at prices well below 150 p per share.

The solution today of merging HBOS into LLoyds TSB, by our great bankers, economists, and government leaders was uninspired and impotent. It merely feeds into further globalisation.

What should they have done instead?

They should have implemented a host of restrictive market controls (instead of pursuing the fool's gold of free markets) as part of a systematic economic de-globalization policy.

Whose job is it to think up these things, and why are they still getting paid if they aren't doing the thinking?

Open Source Economics.

Couple of things...

Firstly there's another rumour that a merger between RBS and HSBC is now on the cards.

Secondly, there's another rumour doing the rounds up here in Scotland that Brown saw this deal as an opportunity to weaken the argument for Scottish independence.

True or not his lack of support for such a venerable Scottish institution almost certainly means his chances of winning even his own seat back at the next election are probably less than zero.

All that crying over the loss of virtual wealth ,that never existed beyond cyberspace in the first place is enough to make a fat cat laugh all the way to the piggy bank ,before performing a genuine hold up followed by a crash


Was this what was meant by cash[22]less banking

It now looks as though the banks have been stealing wealth that never existed in the first place from fools who thought it was theirs ,clearly new laws must be passed ,so that these bounders can be brought to their senses