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Lloyds to buy HBOS

Robert Peston | 09:00 UK time, Wednesday, 17 September 2008

Lloyds is in advanced merger talks with HBOS to create a giant UK super retail bank, I have learned.

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The deal, if it goes through, would end the uncertainty about the strength of HBOS following the calamitous run on its shares.

And the valuation of HBOS will not be at the current rock bottom price but at a level much closer to the price of last week - so nearer 300p a share.

I'll elaborate later.

UPDATE 09:45AM: The merger of Lloyds TSB and HBOS would end the uncertainties about the future of HBOS, whether it would be strong enough to withstand the downturn in the housing market.

The deal, which could be announced tomorrow, would create a bank valued at around £30bn.

It has the blessing of the City watchdog, the Financial Services Authority, because the enlarged bank would be perceived as better placed to withstand the storms raging through financial markets than either of them on their own.

But the Office of Fair Trading is bound to raise concerns about whether the enlarged bank would have excessive and unfair shares of the mortgage and savings market.

If the deal weren't to happen, there would be a risk that that the extraordinary slump we've seen in HBOS's share price would spook wholesale providers of funds to HBOS - which would be little short of calamitous.

So HBOS depositors should be reassured that Lloyds wants to buy HBOS (because to all intents and purposes it would be a takeover).

The one group weeping would be those who have sold HBOS's shares short - and will now suffer big losses, as HBOS's shares soar.

UPDATE 10:32AM: I am hearing that this deal has been negotiated at a very high pay grade level, with the Prime Minister, Gordon Brown, talking to Sir Victor Blank, chairman of Lloyds TSB, about how helpful it would be if Sir Victor could bring himself to end the uncertainty hanging over HBOS by buying it.

It was not in the government's interest for there to be the faintest risk that it would have another Northern Rock on its hands.

So are there any sticking points. Well, maybe I've slightly over-egged the price that Lloyds TSB will pay for HBOS. Perhaps it will be nearer £2 than £3.

In the end, Lloyds TSB is in the driving seat. It would be, in a way, be a rescue takeover.

And it has a very powerful negotiating position, in that no other British bank - and few overseas ones - have the capital available right now to absorb HBOS.

UPDATE 12:01PM: The big potential obstacle to this deal is the market share the combined group would have in mortgages and savings.

But I understand Lloyds and HBOS have a clever ruse to allay the concerns of the competition authorities - which could in theory block the deal.

It's crucial that there is a way through this competition problem, because confidence in HBOS would be severely dented if there were an extended period of uncertainty about whether the takeover can be executed.

However, for the avoidance of doubt, neither side has asked for taxpayers' money - either from the Bank of England or the Treasury - to facilitate this deal.

All that's required is that Mervyn King, the governor of the Bank of England, is true to his recent word and puts in place new arrangements that would continue to allow all banks to exchange mortgage assets for the equivalent of cash.

Finally I understand there is a bit of controversy out there about what I've said about the price Lloyds would pay.

So for the avoidance of doubt, Lloyds would offer shares as the currency for the takeover (not cash) and as of last night the value per HBOS share of those new Lloyds shares was close to £3.

UPDATE 12:34PM: I now know more about how the competition obstacles to this deal will be surmounted. The government will announce that in the interests of financial stability it will legislate to over-ride the powers of the Office of Fair Trading and the Competition Commission to block the deal.

And it won't be long before the formal terms of the takeover are announced. Both boards met this morning and are meeting again tonight to give their approval.


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  • Comment number 1.

    Great.. This means it would be sensible to create a new Scottish bank.

  • Comment number 2.

    what would that mean for customers?
    would the Competition Commission have anything to say about such a large bank?

  • Comment number 3.

    So, if all the UK Banks are not to become just one Bank what use was it to deposit 35000 pounds in lots of different banks to spread the default risk!

    The UK Government guarantee is 35000 pounds per institution, rather than per account. We badly need new legislation in this area or there will be nothing else that is safe(ish) other than government bonds.

    This takeover will presumably imply that customer choice and competition on the high street will be further eroded, but I suppose that is better than the collapse of HBOS and loss of ones money.

    How many jobs will go?

  • Comment number 4.

    it looks like the speculators have got what they wanted and small private investors stand to loose......... who knows how much.
    but of cause not as much if HBOS had collapsed so thats alright then!

    will this consolidation create the competition in the market place that the governor believes will bring down rates for ordinary people and families? NO

    will it create bigger profits and protect large pay packets and bonuses for the bankers that have failed to protect us all from the current mess? YES

  • Comment number 5.

    No ! NO ! NOOO !

    The last thing Lloyds needs is to be straddled with a lame dead duck like HBOS !!!

    This is just going to make things worse by not teaching people a lesson when they indulge in unsustainable business models and practice.

    Regulators and Competition Commission - JUST SAY NO !!!

  • Comment number 6.

    How will Bank B overpaying for Bank A save the world? Or will this turn into another Northern Wreck?

    Queues outside Halifax branches this morning?

    Could Brown preside over TWO runs on a bank and survive?

  • Comment number 7.

    sorry how much of the deposit market? 50%?

    and how much of the mortgage market did you say? 25%?

    shurely shum mishtake...

    may as well just have one bank then and shut down the competition commission.

  • Comment number 8.

    "Lloyds is in advanced merger talks with HBOS to create a giant UK super retail bank"

    Oh, say it's not so. Is this Lloyds as in Lloyds TSB? I moved my business account from Lloyds TSB to Bank of Scotland about two years ago because of the rubbish service at Lloyds.

    Time to move again.

  • Comment number 9.

    If Lloyds TSB really merge with HBOS it will lead to the biggest shake out in High Street banking ever.
    Combined savings in property, staff and head office functions would lead to enormous redundancies throughout the country.
    If Lloyds wants to get into the house mortgage business in a big way then this could be the way to go, although hitherto it has been strong on customer loans which have been far more controllable.
    I don't see the sense in this at all, although it may appeal to the ego's of the chief executives.

  • Comment number 10.

    Since Lloyds TSB HBOS is far too much of a mouthful, any suggestions for the new institution's name?

    How about Bank of Last Resort?

    I hope that whoever has been driving the HBOS price down today didn't get out in time.

    A better solution in my opinion would have been for HMG to step in and take a lump of HBOS at say 1.50 a share. That would have served two purposes- to guarantee the bank and to deter speculators from targeting the main UK banks.

    What next, the Royal Bank of Barclays?

  • Comment number 11.

    I'm an expert on shares, but if Lloyds are buying HBOS shouldn't the latter's shares go up?

  • Comment number 12.

    If the eventual price per share is to be close to £3.00, then why are HBOS shares trading at close to just £1.00?

    Is the market putting a proverbial gun to HBOS's head and saying 'sign or else!'

  • Comment number 13.

    Was HBOS was being shorted heavily by the underwriters who were keen to recoup their losses?

    I think that HBOS have no one but themselves to blame for these problems. They heavily over lent to homeowners and created the bubble in the first place. The MD is a joke. A short trousered shopkeeper!

    Where's the gravitas and intellectual weight?

    I have a savings account with Lloyds TSB. I was already unhappy with Lloyds's overseas call centres so if the deal goes ahead I am off.

    Lloyds can only be polluted by this deal.

  • Comment number 14.

    It's a shame Lloyds weren't allowed to buy Northern Rock and especially with this expediency! Why did the government think that was such a good idea and NR such a bad one?!

    I can only assume HBOS have much higher liabilities, so the government must have agreed to sweeten the deal for Lloyds.

    Would I be wrong in imagining all of the money flowing out of HBOS et al will be flowing to the only bank with a gilt edged (or should that be guilt edged) government guarantee - The Northern Rock must be struggling to keep pace with the deposits!

  • Comment number 15.

    I smell kippers!

    Can the unusual activity in HBOS shares and this news be unrelated?
    Afterall much comment has been made in the last days that despite the general trend the activity in HBOS shares was highly unusual.

    If the talks are advanced perhaps the first unusual activities might just happen to coincide with the commencement of these discussions.
    We all know the city leaks like a sieve, after all unless the HBOS press office phoned the news where else but a leak does it come from?

  • Comment number 16.

    A note to Gordon Brown. It's called the free market, and it needs feeding. You can either let it run now or tie it up with red tape and taxpayers money, but don't complain when it gets hungry and bites your arm off (and takes your house).

    Oh, and what was that you said about eliminating boom and bust?

  • Comment number 17.

    Where is the risk management in this industry? Every year billions of pounds worth of bonuses have been paid on the basis of volume but with no reference to risk. Its almost as if the Risk Managers have been walking around with their fingers crossed for 20 years.

  • Comment number 18.

    So now they turn on themselves!!

    The free market buccaneers who can make money out of anything now have to try and destroy what they have created just to carry on making a profit.

    What will be the size of the individual bonuses to be made out of bringing HBOS to its knees and into Lloyds TSB?

    Financial services will eat itself!!!

    Unfortunately taxpayers are funding the banquet again and again!

    And when it's all over, and the masters of the universe are hungry again? Well, a new round of bonuses will no doubt be made from re-privatising AIG, Northern Rock etc....and re-structuring HBoSLloyds.

  • Comment number 19.

    Lloyds are buying HBOS for £3 a share. Shares are well below this now? Shouldn't we all be buying shares HBOS?

    Does anyone think that the artificial driving down of the HBOS shares has benefitted Lloyds to the point it almost looks like they could have... Sorry, conspiracy theory mode kicked in then!

  • Comment number 20.

    This is excellent news. The alternative would be that if HBOS were to fail then the already illiquid money markets would freeze, banking sector confidence would crash and all our mortgage rates would increase.

    The competition commission should see the bigger picture.

  • Comment number 21.

    16 eddixon

    It's feeding on itself!! And then it will feed on us!!

    Funny how the free markets can do their worst in Chile, Boilivia, Russia, South Korea, Thailand, Japan etc etc with barely an eyebrow raised. But when they turn on US snd UK.....hhhhheeeellllpppp!!!!!!! Someone bail us out!!!

  • Comment number 22.

    Did anyone see John Stewart on the Daily Show yesterday? He explained the banking shakedown as follows (roughly):

    "You know that money you put in the bank that you want to use later to buy, you know, food and stuff? Well, they haven't got it any more."

    Anyway, a simple question for somebody who understands economics: when the Federal Reserve of the Bank of England bail out a bank, do they use real money, or do they just print some more?

  • Comment number 23.

    Dear Robert Peston

    I am an avid reader of your excellent, well-researched blog but I was a little put out by your bragging on air at 9.30am when you declared "an exclusive" re the tie-up between HBOS and Lloyds/TSB. Given the dramatic share devaluation in HBOS since Monday, and given the conservative/prudent lending criteria applied by Lloyds/TSB over the past ten years, it seemed axiomatic that this merger would be enacted to the mutual benefit of these key players.

    Robert- a little more humility, please. Many of us anticipated this move.............

  • Comment number 24.

    From past experience very few mergers work out simply because they cause conflict between the "old guard versus the new guard". We should never forget that companies are made up of people and people have their own individual foibles such as jealousy and mistrust. I well remember the merger between ICI Fibres and the then British Nylon Spinners (BNS) which was such a disaster that the company HQ in Harrogate no longer exists and is now Hornbeam Business Park. So much for mergers! HBOS looks to be going in the same direction?

  • Comment number 25.

    Great! just what we need a really big super bank such as they have in the USA.

    If that goes bust then we certainly will be in the smelly stuff.

    These people are just playing with us.

  • Comment number 26.


    Robert used to be at the cutting edge of financial journalism 18 months ago - now he's just being used by the 'powers that be' to leak market-pumping stories at just the right moment.

    Ever been had, Robert?

  • Comment number 27.

    This all stinks to of insider trading and market manipulation ...

    Stock opens at 1.85 goes up a bit then suddenly dives to 88p (Heavy shorting that perhaps causes lots of auto stop-losses kicking in) ... then suddenly the news of a LTSB-HBOS merger at £3 30 mins later and price shoots back up ...

    Somebody has made a killing here very obviously using inside information. If this is just "the free market" then I'll eat my hat.

  • Comment number 28.

    Probably best for everyone to take their money out anyway - or at least get below the guarantee limit.

    Seems a little implausible to me, especially buying it for £3 a share when a lot fo the shareholders just sold some for 83p. I would start at 84p as they seem happy selling around there.

    As we saw with Bank of America buying Lehman, these rumour and talks often lead to nothing and then the bank collapses and you cannot get your money out.

  • Comment number 29.

    The Competition Commission should step in to torpedo this deal to create a UK superbank.

    HBOS is, as many people claim, too big to fail, and another buyer could be found at a more sensible and correct price than the £3 Lloyds deal.

    I'm sure the Chinese Central Bank would be interested in a purchase at £1.20 a share, keeping the bank afloat whilst simultaneously ensuring greater competition in the market.

  • Comment number 30.

    And the combined entity would also be even more "too big to fail".

    So perhaps the answer is to break up these big banks (say 5% market share) so that in future they are all small enough to be allowed to fail when they're down right stupid and reckless.

    It's time to break the banks up!

  • Comment number 31.

    Something very strange is going on with HBOS's the space of a few minutes this went from trading at over 200p....then went down to around 100p only to the shoot back up to over 200p a few minutes later....what the hell is going on?....these are unbelievably violent price swings. Even accounting for the latest news re Lloyds TSB

  • Comment number 32.

    I have been quite a critic of you robert, with your doom-laden reports all the time and hardly ever reporting any good news (such as mortgage rates plumetting over the last 3 months).

    But I have to hand it to you - you are certainly in the know! Well done (But I dont take it all back! LOL!)

  • Comment number 33.

    A few points

    Mergers equal less competition and even worse customer service.

    Low share prices will result in more British companies passing into foreign ownership.

    Somebody is going to get very rich out of this.

    The man on the street will end up with poor choice, poor customer service, rising costs.

  • Comment number 34.

    ferringbill 'Do me a favah, guvnor..!'

    Yes, of course, it is easy to see how 'obvious' this tie-up is with 20/20 hindsight...

    No doubt you made the call the other way when they did not take over Northern Rock ?

    I think Mr Peston is quite justified in claiming this 'scoop' - it is a journos 'stock-in-trade' after all...

  • Comment number 35.

    So, just to be clear Robert, it was you that broke this story and not Karl West in the Daily Mail? Bit cheeky claiming it for yourself - again.

  • Comment number 36.

    When will Lloyds TSB say we changed our mind and offer £1.50 only? Of course yesterday's suspicious activity was nothing to do with them guv.

    We could really do with a dozen fat cats being strung up on lamp posts on Wall Street and the Mile as a warning to the rest.

  • Comment number 37.

    re Post 19

    I signed on to spreadbetting account to bet for a retracement in price but there was a 50p or more difference in buy/sell prices for the best part of an hour, also no online trades accepted while price was heading back up.
    Trading firms want to keep all profit for themselves.....

  • Comment number 38.

    Oh, those evil hedgies! How dare they believe a company to be overvalued! Honestly, you might think the Stock Exchange was a free market or something. (And I speak as an HBOS shareholder)

    I suspect another group weeping might be Lloyds TSB shareholders if they believe that Lloyds is being forced into a shotgun marriage with a basket case at a price way above the odds. Sin in haste, repent at leisure?

    And if HBOS is in trouble, then what price Bradford and Bingley? Who's left to take them over? RBS/Natwest still suffering from their ABN-AMRO acquisition, Barc picking through the wreckage of Lehman, Lloyds too busy with propping up HBOS, Santander with All/Leic, I guess that leaves HSBC as the last man standing.

  • Comment number 39.

    What will happen to Howard?

  • Comment number 40.

    So, this means all the smaller Banks will inevitably be swallowed up by their larger cousins.

    In the old days this would draw in all the takeover arbitrage investors.

    Nowadays it just seems to bring in shortselling hedgefunds.

    When will massive stock lending be curtailed ?

  • Comment number 41.

    there's two points i'd like to make.

    Que: Where are we in the credit crunch then?

    Ans: The credit crucn is like a meal. We've had the starters and now were chomping into the main meal as it were...

    Que: how stable is the CDS system

    Ans: if yoy had a disease like foot and mouth, an epidemic, you would ring fence the animals and adopt a strategy to limit the fallout as was done recently.

    The CDS is a wonderful system for the transference of a contagion throughout the world. IF it were cattle, it would be like us making sure infected cattle were literally tranported to uninfected herds.

    in short its a wonderful system designed to fail when it is critically needed.

    not surprising when you tink that the financial system has become like an inverted pyramid with all too few indians at the botton and too many cowboys at the top to mix my metaphors. Cheers.

  • Comment number 42.

    I guess the idea here is to produce a bank which is 'too big to fail' - ie more taxpayers money on the line.

    Since every High St has both a Lloyds and an HBOS, presumably this will entail massive job losses at HBOS.

    Like the 'rescue' of AIG, I fear all these steps will not prevent the inevitable, just delay it a few more weeks.

  • Comment number 43.


  • Comment number 44.

    So why aren't the Shortsellers targetting Barclays for taking on toxic staff ?

  • Comment number 45.


    I hope the people and hedge funds who shorted HBOS get stung badly.

    Aggresive shorting is one of the main drivers of financial turmoil at the moment. I am not a fan of shorting companies at the best of times but right now it really aint cricket and just adds to the global credit crunch woes that everyone is suffering.

    I'm pretty confident HBOS could have weathered out this storm without any real problems if it wasn't for them clearly being picked on as an easy target.

    If you trade on shorts I hope you are crying into your lunch this afternoon rather than dancing gleefully like I'm sure you were at breakfast.

    For the record I have nointerest in HBOS at all dont even have an account with them.

  • Comment number 46.

    what happens to your mortgage if your mortgage provider goes bust?

  • Comment number 47.

    Thank goodness for Robert Peston !
    He makes things that we need to know about so much easier to understand.
    Thanks, Robert.

  • Comment number 48.

    A commenter on the FT says that only 4% of HBOS was out on loan (ie. short) yesterday. Perhaps you can tell us whether this is true or not? Also, why hasn't there been any kind of statement yet?

  • Comment number 49.

    Very opportunistic of LTSB. But what would they call this new corporation? A fortune to be earned by the branding consultants?

  • Comment number 50.

    Well, here's hoping the architects of this crisis get taken to the cleaners. I mean of course the big shorters.

  • Comment number 51.

    £3 then £2. in very volatile markets with shareholders and depositors money at stake you need to temper your enthusiasm for speculation and behave more responsiblity. think before you write at the moment

  • Comment number 52.

    "Perhaps it will be nearer £2 than £3."

    Yes !!

    Well done again on this SCOOP Mr Peston !!

  • Comment number 53.

    So this is all being negotiated at a `high pay level'.

    Since when has there been a direct relationship between pay and ability?

    Some extremely well paid people have brought our economy to its knees, whilst some poor people are very good at making ends meet. It is all about what is needed rather than what is wanted.

    Perhaps it is time we turned the world upside down and let the meek inherit.

  • Comment number 54.

    Interestingly, Halifax's own sharedealing service was unavailable Tuesday afternoon and unresponsive to dealing requests this morning too. So small investors with HBOS were unable to either buy or sell; optimistically take advantage of the low price, or bail and sell. Bet the big traders didn't have this problem!

  • Comment number 55.

    Robert, are you not also guilty of irresponsible rumours now? This is price sensitive information to both HBOS and Lloyds so to suddenly change your mind so drastically about the price is scandalous and suggests a lack of diligence in your keenness to get a scoop out. I am now SHORT Peston.

  • Comment number 56.

    Have you seen what this is doing to the share price of HBOS. It appears that the short sellers are desparately trying to push the share price down. Not sure how responsible this news release is, it is definately having a huge impact on the share price. If you announce that the effective value of a share will be 300p whilst it is trading around 120p isn't this as iresponsible as some of the short selling practices? As with short selling I don't know what the answer to this practice is.

  • Comment number 57.

    Anyone shut out of participating in HBOS share speculation from Barclays stock brokers??

    Tried to buy near 150p but they have suspended trading on those shares. Utterly let down by barclays! How are small investors meant to be able to participant in the stock market?

  • Comment number 58.

    Not wanting to pour cold water on this deal getting done and bankers, accountants and lawyers taking their egregious shares of lucre, but whenever PM 'Jonah' Brown has been publicised as supporting a sports personality, team or whatever they've failed.

    It's the 'Jonah' Brown touch.

    ps will he be looking for a 'bung' to shore up Labour Party finances?

  • Comment number 59.

    I have been told by all sorts of people and the Government to be prudent and not live beyond my means. So I have saved over the passed 30 years little by little and now have a sizable sum above the limit of 35,000

    Why does the Government NOT guarantee all deposits in the institutions. This is my hard earned savings risked by some bankers who want to get rich quick. Means the Government will have to support me in old age as I could lose my savings.

    The shareholders know the risks so no help required there!!

    Why did all the press and banks say this morning - do not worry about HBoS and then they are secrectly in talks...

    Why are banks greedy for profits BUT when losses appear pass it onto us the taxpayer.

    Why has HBoS which looks after the UK market exposed to the US?

    How do I get the £3,500 that the government has put into Northern Rock on my behalf out of it? Rethorical question as where would I put it?

  • Comment number 60.

    The former CEO of Bank of Scotland, Peter Burt, who merged a once great institution with the Halifax Building Society, should hang his head in shame.

    Not only has it destroyed shareholder value, but the "merger" with Lloyds TSB will result in huge job losses

  • Comment number 61.

    How could a serious business commentator suggest the price would be 300p per share?

    HBOS had a rights issue at 275p a few months back, and could not sell the shares at that price!

    Lloyds, as you have belatedly recognised, is in the driving seat here. They can walk away and watch HBOS have to be rescued by the Government, or get the bank at rock bottom price.

    I think the price will be closer to 175p per share. But running with the 300p per share story certainly helped boost the share price in the short term - well done.

    I wonder who dropped you the info?

  • Comment number 62.

    I agree with Drew_lg - A sad day for HBOS customers if this leads to more overseas call centres.

    I use an HBOS credit card and its UK call centre is the best I deal with. I was thinking of transferring my personal and Business current accounts and my business credit card to them.

    A key criteria for doing business for me is a UK call centre. In part because I think it is short sighted to outsource UK jobs, but mainly because you can waste ages dealing with the accents and misunderstandings (not to mention the multi-level menus, both phone and agent) that characterise a lot of overseas call centres.

    I have switched insurers (Car, House, Prof. Indemnity) and ISP on the basis of time wasted dealing with overseas call centres. Sure, It costs me a little more, but the service is much better and I more tan make up the cost in saved time.

    I was at a business meeting run by Lloyds a year or so ago when the subject of Lloyds use of overseas call centres came up. To say the Lloyds' rep in my group went away shell shocked would be an understatement.

    Let's hope for the sake of HBOS service and UK Plc jobs that Lloyds leave the excellent HBOS contact centres intact.

    If not, I for one will be moving!

  • Comment number 63.

    I see a problem. As Robert says the OFT are bound to investigate this which will take a few weeks at least. They might then refer it to the Competition Commission whose investigation would take more than a year.

    Lloyds could buy HBOS but the merger may then have to be unwound if the competition authorities found it to be anti-competitive. I suspect Lloyds will be looking for assurances that this wouldn't happen. And yet the Govt isn't able to provide such reassurances because the competition authorities are independent.

    A message for Lloyds: caveat emptor.

  • Comment number 64.

    So, we have HBOS which is being saved because of its size and impact on UK economy being taken over by Lloyds TSB. This will create a bank so large that it most definitely couldn't be allowed to fail. Short term gives investors confidence.

    Snag is that the combined bank is then in a position (after a respectable time) to go on a mad lending spree, pay excessive wages / bonuses etc just as the huge US companies have done as it will know it can't be allowed to fail.

    Better idea would have been compulsory disposal to other UK banks of say half HBOS mortgage book.

  • Comment number 65.

    #26 If the choice is between fuelling mis-placed confidence or lack there-of I know which one I would prefer. One results in short term inflation of price and the other results in catastrophic failure of a bank that possibly could have survived.

    It would be irresponsible reporting to contribute to a run, which is a phenomena based on a mixture of objective analysis and horribly compelling group dynamics as adrenaline and fear combine, compelling everyone to avoid being the last person holding shares.

    I suspect RP has in mind the fall-out from Northern Rock, bankers are not the only ones who can suffer from risk taking.

    I think combine them, alleviate doubt, wait for everything to settle then regulate to sort out competition issues in the future, it will be very interesting to see what policies are being formulated for future implementation at the moment, any sources RP. We hear vitriol from across the water but everyones going to be hedging their (poltical) bets before elections there and here I guess.

  • Comment number 66.

    How can this happen? Just this morning, you were telling us HBOS had all the capital it needed to ride out the crisis - now the short-selling by the hedge funds means my investment which last week was worth over £3 a share, and was probably fairly valued at that price, will be given to Lloyds shareholders for two-thirds of that.

    I've had it with investing directly in shares; the small investor just gets turned over every time. I'm moving some into funds and investing the rest elsewhere.

  • Comment number 67.

    Oh God.

    Gordon Brown has got involved? Jonah Brown? That's HBoS doomed then. And possibly Lloyds too.

  • Comment number 68.

    I am deeply concerned by the panic thats going on at the moment. Short selling is rampant and its determental to the whole economy. The media need to shore up the situation and no longer talk up a mess.

  • Comment number 69.

    HBOS were always pretty awful, so in the end the greed and incompetence has come back to bite them. I feel sorry for the normal staff in call centres and branches who had little decision over anything - anything involving a real decision was dealt with by underwriters etc at remote locations. However in the end the sooner the idiots in charge are publicly humilated the better. I just hope they get a good metaphorical lynching for their actions which have succeeded in destroying two previously successful institutions.

  • Comment number 70.

    If Brown's involved,whatever results will be doomed!

  • Comment number 71.

    I really think it is irresponsible for a journalist in your position to be making specific comments about share prices. If this practice was carried out by city professionals I am sure thay would be facing legal action.
    What you have now said could have put a ceiling on the HBOS share price of £2, I believe you have directly affected the market with this inside information.
    I don't think you are going to get away with this one Preston.

  • Comment number 72.

    "What will happen to Howard?"

    Howard is a clever chap and got out a few months ago if my memory serves me right.

  • Comment number 73.

    So the predator turns up saying he is a white knight and the monopoly and competition complaints will be brushed aside due to it only being a white knight, a saviour is needed. Clever stuff. At least it many get rid of those ghastly smirking halifax ads.

  • Comment number 74.

    "I am hearing that this deal has been negotiated at a very high pay grade level, with the Prime Minister, Gordon Brown, talking to Sir Victor Blank, chairman of Lloyds TSB, about how helpful it would be if Sir Victor could bring himself to end the uncertainty hanging over HBOS by buying it.

    It was not in the government's interest for there to be the faintest risk that it would have another Northern Rock on its hands.

    So are there any sticking points. Well, maybe I've slightly over-egged the price that Lloyds TSB will pay for HBOS. Perhaps it will be nearer £2 than £3."

    Surely the important thing is not that this "rescue" deal has happened, but what it has/will cost to make it happen. Even on a going-concern basis, a prudent valuation of HBOS shares would be zero, so what undisclosed promise has the Great Helmsman of Kirkcaldy made to the shareholders of Lloyds TSB for their executive board to agree to paying good money for such a basket case?

    How much of the HBOS contingent liability to the housing market will not actually be assumed by Lloyds TSB, but by the UK taxpayer?

    How much will it cost the UK public for Lloyds TSB to have been allowed to make super-profits due to their control of such a large share of the future banking market?

  • Comment number 75.

    This will stop City Jokers who gamble on the share price by buying Shares ' on credit ' and then selling shares at a lower price and then pocketing the difference.

    They should make ' Selling Short ' illegal - they knew fine the Bank would be supported by ' tax payers money ' if they got into trouble so these people are making
    money on our Backs.

    HBOS was nearly £ 10 a share last year and since the credit crunch it has been attacked by these City Jokers - its a self perpetuation Process - the lower it goes the more Jokers jump on the band wagon

  • Comment number 76.

    Why are 'shorts' being blamed for stocks plummeting??

    If that's the case why don't these 'shorts' just buy loads of stock because then the price will 'inevitably' go up according to these doommongers.

  • Comment number 77.

    The HBOS model fits very well into the the Lloyds TSB model. Lloyds alraedy has Cheltenham and Gloucester in its stable. One can visualise CandG and Halifax becoming the UK No.1 mortgage lender while the BOS wing with its strong business account element slip comfortably into Lloyds retail banking.

    The merged bank will have much too much High Street real estate and far more staff than is needed. Look out for widespread job losses and lots of 'Lease for Sale' boards.

    I think Lloyds might well have had ABN Amro in mind. HBOS have been paying in part for overstretch in this acquisition. With the Lloyds takeover, you could argue that ABN has found its real value as opposed to the inflated price HBOS paid. HBOS are partners with Fortis and Santander in the ABN adventure and Santander have been active in the UK retail banking market for some time. I wonder if there is a connection.

    Interestingly, Barclays were at one time keen on ABN but did not make a move on this occassion. Their model which includes the Woolwich would have suited HBOS as well. Perhaps they are keeping their powder dry for a cherry picking job on Lehmans?

  • Comment number 78.

    "I am hearing that this deal has been negotiated at a very high pay grade level, with the Prime Minister, Gordon Brown, talking to Sir Victor Blank, chairman of Lloyds TSB, about how helpful it would be if Sir Victor could bring himself to end the uncertainty hanging over HBOS by buying it."

    This would be the same Gordon Brown who utterly messed up the business of trying to get a private company to buy Northern Rock? Yet another Gordon Brown stuff-up on the way then!

  • Comment number 79.

    Not content with bringing down Northern Rock, Robert Peston now seems intent on wiping out HBOS as well. When will this end? Has he got a vested interest in all this carnage?

  • Comment number 80.

    Where are the Moderators? As I write there are 30 comments, stretching back 1.5 HOURS, which haven't been cleared yet?

  • Comment number 81.

    Who will the hedge funds go after next?

    My money is defo on RBS !

  • Comment number 82.

    Re: Baalambandpig (comment 39)

    I have a friend who is quite senior in what used to be Halifax (he was in one of their ads many years ago) and I asked him about all of this the other day.

    He said that HBOS had dropped all the tv ads with Howard in as, at the moment "we can't afford to give you extra".

  • Comment number 83.

    If the collapse of HBOS would cause such a catastrophe then surely the competition commission should be told where to shove their concerns?

  • Comment number 84.

    What I do know from my experience of working in domestic finance and debt, is that Lloyds were very unorganised, but also fairly reasonable to defaulting customers. Whereas, Halifax were pretty on top of stuff, but never ever made a deal whatsoever.

    So, either it’s a commuppance, or maybe, Lloyds still doesn’t know how much bad debt its got because its so unorganised.

    They never really merged the TSB with Lloyds – lots of complicated accounts and people paying off debts twice due to mix-ups with account numbers … that sort of mess … Now they’re being paraded by Brown and BoE as the knights in shining armour …

  • Comment number 85.

    They could call the new company - Lloyds Equitable Savings Bank Of Scotland.

    Any ideas how to shorten it?

  • Comment number 86.

    The main focus on the reporting of this story is completely wrong. I see that a few posters on this blog (sherwoodbandit, the_nutty_dragon, wykhamist) have picked up on the real issue that is at stake: if HBOS is too big to fail, what will be the case for a Lloyds-HBOS entity? We are only just at the beginning of a major recession and the collapse of the UK property market, so HBOS will be facing HUGE losses in the coming years. Lloyds would struggle to ride it out on its own, but I very much doubt the combined entity will be able to shoulder those losses, and we will simply end up with our own Fannie Mae/Freddie Mac situation. The eventual result: a massive bail-out from the UK taxpayer.

    The saying "don't put all your eggs in one basket" has been around for a very long time.

    And for very good reason.

    Creating ever larger financial institutions does not lower risk - it INCREASES it. Such a merger between Lloyds and HBOS might be some sort of botch-job, quick-fix short-term solution to the immediate problem but - irrespective of the competition issues - it is a recipe for disaster in the longer term: very Gordon Brown indeed. No wonder his sticky paws are all over this deal.

    IMHO Lloyds shareholders would do well to vote against such a deal, rather than saddle themselves with HBOS' problems.

  • Comment number 87.

    Well, this'll teach me to be lazy. I faffed about not sending my details to a share-broker as I planned to buy several thousand HBOS shares while they were depressed.

    Reading this, I could've made a killing and bought a house.

    *sigh* guess I'll have to get my backside in gear and sniff out the next bank the shorters plan to screw over.

  • Comment number 88.

    I'm not really sure I trust any deal supposedly masterminded by El Gordo.

    This is either another dubious idea from a man who can point to NO good economic decisions of his own, or else a clumsy and stupid attempt to glean some positive PR for the govermnent.

    Looked at more closely, it suggests that the government has been panicked into making the wrong move. HBoS is a victim of stock speculation, and its shares need to be suspended until short-selling is restricted, as it was in the U.S. between 1929 and... oh, around the time this ridiculous mess started last year.

  • Comment number 89.

    "The deal, if it goes through, would end the uncertainty about the strength of HBOS following the calamitous run on its shares.

    And the valuation of HBOS will not be at the current rock bottom price but at a level much closer to the price of last week - so nearer 300p a share".

    "Well, maybe I've slightly over-egged the price that Lloyds TSB will pay for HBOS. Perhaps it will be nearer £2 than £3".

    "for the avoidance of doubt, Lloyds would offer shares as the currency for the takeover (not cash) and as of last night the value per HBOS share of those new Lloyds shares was close to £3".

    How does the last comment amount to "avoidance of doubt"? when he previously said "nearer £3", then "perhaps nearer £2".

    Have Lloyds said they are tied to last night's share price equivalence?

    And as others are posting, if £3 is accurate, why are the shares trading at about £1.80 at present?

    I wonder if Robert really has any idea what the offer price would be... and if he does, is he respecting market sensitive information?

    Anyway, thanks for your contribution to "ending the uncertainty" !

  • Comment number 90.

    #63 APbbforum

    Looks like RPs update from 12.34 clears that up then.

    Things are only uncompetitive if they're not politically damaging! Otherwise, its anything goes...

    To pass emergency legislation to bypass the independant competition authorities stinks of desperation! How desperate is this government to avoid another Northern Rock!?!

  • Comment number 91.

  • Comment number 92.

    Why don't you tell the people what is really going on Robert?
    Way too many common purpose types in the beeb nowadays, which is exactly why no one will be told the truth.

  • Comment number 93.

    This is a deal that is doomed to failure, Lloyds needed to expand income flow form overseas not more of the same.

    Paper swaps are great but when GB gets involved we can be sure it will go pear shaped like his handling of the economy.

    Think again Lloyds before you sign anything.

  • Comment number 94.

    If it's true that the government is going to legislate to over-ride the Competition Commission, I find that extremely scary. The Competition Commission is there for a good reason. Customer service standards are already scraping the bottom of the barrel throughout the retail banking industry, and without vigorous competition, they are going to fall further.

    If this merger goes ahead it will not be a good day for retail banking customers.

  • Comment number 95.

    Robert Peston, this is blatant and disgraceful market manipulation. Why are you allowing yourself to be used in this way?

    Where're the regulators? Where are the official statements on this matter?

    This is creating a false market.

  • Comment number 96.

    I said in #63 earlier that competition authorities would be a problem. No longer it seems. The Govt is passing emergency legislation to over-ride them. Gordon Brown was behind legislation to make the competition authorities independent and remove ministers from merger decisions. But now in one fell swoop this has been ditched.

  • Comment number 97.

    Peston - you've been played like a kipper, you really need to be a bit more careful when it comes to mentioning numbers like £3. Just ask some of your colleagues who actually report the City for some of the rules and obligations you're under. Someone clearly had to dump a couple of million HBOS in a hurry this morning - I wonder if they were your source? I hope the FSA investigates.

    Never mind the deal that has obviously happened here - "You can ride roughshod over competition law, as long as you don't sack anybody who lives in Glenrothes or Dunfermline East". If I was Lloyds, I'd just wait for him to go, and then "cut costs out of the business" in Edinburgh.

  • Comment number 98.

    Regarding post 66

    Obviously your HBOS shares were not fairly priced at £3 a share, as the market has now shown.

    It is a fundamental principle of markets that prices can go down as well as up. Your disbelief (or anyone's for that matter) at the fact they have dropped is astounding.

    The fact that bookies and casinos do so well should show that usually the only winners from gambling are those who control the game, and in effect that is all you are doing is having a punt on prices.

    red or black, heads or tails?

  • Comment number 99.

    big is better so as to ride out the financial storm....

    then the next article on bbc news is that the US Fed has given in and bailed out AIG as this is too big to fail !!!

    Whilst the crisis now and needs some action are we just postponing a potential future problem.

    What assurances / controls will be put in place to stop this new UK superbank from going down the reckless route so many have done this time round ?

    Who do we trust now with our money ? and do we really have any choice as no bank account means higher prices and less access to services ! ?

  • Comment number 100.

    Demonstrates clearly how the regulation of the financial systems in the UK have been non existant.

    Now with the express intent of the Prime Minister (no less) the last bastion of financial regulation is to be thrown to the wind, the competition watch dog.

    So not only have the British public been asked to socialise the risks these banks have taken on, we now allow them cart blanche permission to corner a market and to actively reduce competition.

    So what exactly do the people get from capitalist competitive markets these days?

    Oh yes, we get the privilege of watching tax pounds being spent on easing the banks financial risks and allowing them to contract the market, reducing competition designed to keep the bastards honest.

    Well done Mr Brown, as an ex chancellor with such a reputation for prudence, it is a shame you didn't expect the banks and investment houses to demonstrate prudence too. Seems they are driving us all to the wall with the risks they have taken.


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