HBOS takeover challenged
A pair of the best known and most respected bankers in the UK, Sir Peter Burt and Sir George Mathewson, are attempting to blow up the takeover of HBOS by Lloyds TSB.
Burt and Mathewson - the former chief executives of Bank of Scotland and Royal Bank of Scotland respectively - are convinced that HBOS and its shareholders would be far better off if the bank were to remain independent.
Their intervention will be difficult for the board of HBOS to ignore, not least because Burt is credited with creating HBOS. He was chief executive of Bank of Scotland when it merged with Halifax to form HBOS.
Burt and Mathewson are persuaded that HBOS would be viable as an independent, thanks to the massive taxpayer support offered to all the banks in October by the Treasury.
They have today written to the chairman of HBOS, Lord Stevenson, saying that he and the HBOS chief executive, Andy Hornby, should resign with immediate effect - and that Mathewson should become the new chairman of the bank and Burt should be its chief executive.
Their letter says: "It is our intention to create a detailed alternative plan that we believe will represent better value for both the HBOS shareholders and stakeholders alike by keeping HBOS as an independent bank".
If the board of HBOS were to refuse to appoint Mathewson and Burt, they plan to "canvass shareholder support with a view to requisition an EGM (an emergency shareholders' meeting) to seek your and Andy Hornby's removal from the board" - and their appointment.
Burt and Mathewson would stay in post long enough to ensure that HBOS was once again perceived to be on a sound footing. They would commit to recruit new credible management for the top positions at the bank, to make themselves redundant just as soon as the bank's owners felt that was prudent.
Their initiative may be particularly welcomed in Scotland, where there has been widespread concern that the takeover would lead to significant job losses and could damage the position of Edinburgh - the location of HBOS's historic and imposing head office - as a financial centre.
The Scottish National Party has been highly critical of the takeover.
By contrast, Lloyds TSB's proposed acquisition of HBOS has been supported and facilitated by the prime minister, Gordon Brown.
When announced in September, the takeover was effectively a rescue of HBOS, which had lost the confidence of many of its creditors.
The argument of Burt and Mathewson is that HBOS no longer needs to be rescued by Lloyds TSB, because the Government and Bank of England has offered vital funds to replace those that could be withdrawn by money managers and other creditors. "In the light of new capital from HMG for HBOS, the takeover is no longer necessary to ensure financial stability", their letter says.
They also contend that the terms of the takeover massively undervalue HBOS. The letter adds: "HBOS shareholders should be receiving more than 1 Lloyds share for every HBOS share rather than the 0.605 to which Lloyds have reduced their offer".
One complication is that both Lloyds and HBOS would be forced by the City watchdog, the Financial Services Authority, and by the Treasury, to raise more capital than they are currently doing, if the takeover were not to take place - because they would both be perceived as weaker as independents than if combined together in a new superbank.
The Treasury is currently offering to provide £11.5bn of capital to HBOS and £5.5bn of capital to Lloyds TSB.
The Government might not be delighted if it was forced to provide more taxpayers' funds to the two banks.
However, Burt and Mathewson believe that HBOS would require very little additional capital, perhaps a few hundred million pounds, whereas Lloyds has announced that as an independent it would need an extra £1,5bn.
The competition authority, the Office of Fair Trading would be pleased if the takeover collapsed, because it fears that the combination of the two banks could make the British banking market less competitive, to the detriment of consumers.
UPDATE 11:10
The big imponderables are:
1) whether this intervention will cause anxiety for those who finance HBOS, whether it will cause an erosion of deposits and credit lines, and thus shake the stability of the bank;
2) whether the Treasury would be prepared to commit additional capital from taxpayers to support the banks as independent entities.
If the Treasury won't back them as independents, or if the possibily of the deal not happening appears to be damaging HBOS (or Lloyds TSB), then the authorities will instruct the two venerable Scottish banking knights to ride away into the sunset.
UPDATE 17:00
HBOS has now formally told Mathewson and Burt to hop off. The chairman, Lord Stevenson, has written to them saying he sees "no basis for future discussion".
I'm 
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Robert,
You forgot to mention that this could be good for customers too
MORE competition between banks is what is needed not less! This means more financial products and hopefully lower prices!
I hope these guys succeed!
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Why is a job in Edinburgh more valuable than a job in Halifax?
Take any objective measure - average income in the region, alternative employment opportunities and you have to agree that if you make a case for regional preferencial tratment then the preference has to be Halifax.
In any case, resourcing decisions are normal commercial decisions for the companies involved. They should be free of government interference which at best is well intentioned but usually misguided.
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This is becoming farcical. Has no one at the Treasury, Bank of england ans the Financial Services Authority devoted more than ten minutes of strategic and financial to this issue? I get the impression that too much time was spent on getting the political soundbite right rather than sort outthe more complex subjects.
I used to work for HBOS on the IT side. That was complicated enough with multiple platforms and different mainframe systems in the group. A merger with Lloyds TSB at the IT level would be a nightmare, just from the financial and statutory reporting angle. That alone should have alerted the somnolent regulatory authorities that the merger was a non-statrter.
But I suspect that GB and AD will hold firm and not want to appear weak in accepting another U turn. The other real danger is that the proposed merged entity, would be too big to rescue in the forthcoming downturn. Why have some of the branded divisions within HBOS not been sold off such as sainsburys Bank? RBS after all sold the Tesco Insurance arm back to Tesco raising i think GBP 1 billion.
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I would be more impressed if they were proposing someone else for the job, or someone else was proposing them.
Self-referrals are always suspect...
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People seem to forget the trauma that was going on the day Lloyds stepped and rescued this. HBOS would have been toast. The market was in free fall. If RP hadn't reported the news HBOS would have crashed and burned.
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I believe a large percentage of the shareholders of HBOS are ordinary members of the public and not institutional.
Mr Preston - what difference would it make to the viability of an independent HBOS for those shareholders to back "their" bank and move funds back into savings accounts?
I guess the current management are now being controlled by Lloyds TSB and hence would not offer a real top-end savings product to attract us, and others, back.
The issue of job loss and competition is important to us all and maybe it's in our hands to influence this issue.
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Perhaps this is what was in the wind last week with the rumour of a further bid for HBOS? It wasn't a merger or acquistion bid, rather a rescue bid?
It sounds like HBOS AND LloydsTSB may have just been thrown a life line! I believe that shareholders for both were not at all happy with the merger idea, and if I recall, the stock Market was not kind to either banks' shares a few weeks ago.
I would, however, urge caution-I don't know much about either gentleman, nor the 'nuts and bolts' of their plan. Given that CEO's and bank boards are increasingly appearing to have been responsible for gross negligence of duty, the crux and feasibility of this rescue bid will be in the details.
This could be exactly what HBOS needs, or just a clever way of making the shares lift out of the doldrums and give GB a challenge.
A great nugget of info, Robert-more details please!
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This leaked letter represents a very serious challenge to the Labour government's plans for a Lloyds takover of HBOS.
So I assume it was leaked to you by your mole at No.10 in an attempt to undermine Sir Peter Burt and Sir George Matthewson.
I expect now that Labour ministers and Lloyds executives will now heavily criticise the two former bank chiefs.
Well done Robert you play the part of willing fool only too well.
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@ 1
MORE competition between banks is what is needed not less! This means more financial products and hopefully lower prices
Mmm, but isn't too much competition and too many products a big part of what caused the grief in the first place?
I'd say that we need less competition and fewer products in the banking sector.
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#5
And your point is?
It does not matter where we were........ as everit is where we are that should predicate decisions!!!
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These guys just don't get it, do they? Their reputation - along with almost everyone else in the sector - is permanently and irrevocably shredded.
They can flaunt their undeserved knighthoods for all their worth but cognitive dissonance tells us that the opposite of what they say is probably the desirable path.
Competition among the high street banks is an illusion anyway. Multiplicity of choice is not the same as genuine competition, merely a mockery of it. Has anyone walked down their main road and found a single instance of one of these institutions breaking ranks on the things that really matter - interest rates, charges, innovative services, quality of service? All they do is tinker around the edges and boast about it.
For years, these parasites have leeched off the product of hard-working people simply focused on affording their home, enjoying the fruits of their labour and putting something aside for retirement or rainy day.
They should summon up what little humility they have, shut the you-know-what up and go gently into the dark night of their own retirement.
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If HBOS shareholders allow this merger (or another as substantial) to fail, they risk being left with nothing should a second credit storm break.
Undervalued? They should feel very, very grateful that anybody was willing to step forward and assign any value to the company at all...
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@Gordonisamoron2
I don't think for a second anyone is suggesting that a job in Halifax is any less important. By saving jobs in Scotland (i.e. by HBOS retaining its independence) jobs will be saved in Halifax.
It is just that Halifax doesn't have quite the same platform to rally around (being a town rather than a country). But if you are worried about your local jobs, then you should be throwing your lot in with these two guys.
@scagiola
Name two more suitable candidates for the roles? I'd also point out that they are proposing themselves very much as "caretakers".
@excellentcatblogger
The Treasury, I understand, has made it clear that it is up to shareholders to decide. Currently there is only one offer on the table.
Indeed, at this stage any alternative plan is very much an outside bet. Matthewson, Burt and other guys like Jiim Spowart have been raising headlines about possible alternatives now for some time.
They really need to move beyond the PR campaigning and produce some firm details and/or significant shareholder support.
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If Burt and Matt are so sure that the LTSB bid is undervalued, it should be a doddle for them to put together one of their own. A few phone calls to their friends in the Gulf should do it.
Come on B & M, get bidding - do I hear £3 a share?
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The question of why the merger / takeover is going ahead has been asked very publically in television interview and blanked. The merger was pushed through as an idea very quickly and under a set of circumstances which changed significantly very shortly afterwards with the tax payer money coming in. Gordon Brown will try to block any discussion but the competion issue is a serious one. Lloyds indirectly talking of significant job losses, which always had to be their objective, was a serious mistake, it was bound to trigger some action somewhere. Personally I do not like the smell of the PM and the Chairman of LLoyds getting together over wine and biscuits and cooking up deals like this, with the normal Competition Commision role casually blocked. Could it be that Gordon Brown has got it wrong.
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At last, this is what many small shareholders want to see happen, I'd happily invest more in the future of HBOS but not if it is subsumed into LloydsTSB. There are many small shareholders, not rich people, who see the creation of one enormous mega bank as a disaster. An independent HBOS would be the ideal solution
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About time that someone with the gravitas and experience is stepping in to protect the HBoS shareholders and the Scottish economy. these guys know what they ae doing. They were not responsible for the current debacle and they are right in demanding the resignations of the current incumbents both of whom have overseen the worst financial performance in many years.
As for the comment that Robert is a toadying fool to Nu-labour spin that goes without saying, but amusing to watch.
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If I was in Lloyds' position I would not try to make the IT system fit the merged company. I would identify the best IT system of those that are currently are in use, identify the systems that can be moved over or patched in easily (offer customers incentives to move over) and sell the rest. Savings accounts are liabilities anyway if you believe the bean counters. Mortgage accounts (which allowyou to print money) are much more static (you can't draw money out) and can be reorganised on an IT basis more simply.
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My worry is, as a shareholder, how can I trust HBOS CEO Andy Hornby to get the best deal, or do the right thing. It seems he is going to get a £60,000 per month retainer from LloydsTSB to help this merger go through.
Can someone explain how this works.
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This comment was removed because the moderators found it broke the House Rules.
I hope this will kick start some meaningful opposition to the take over, for something as big as this a deal behind closed doors (especially one aided and abetted by the government) is inappropriate. I wonder why there has been no proper debate, no discussion no attempt to lay out for the public the pros and cons of the take over and I think it's about time this is addressed.
I would be very glad if HBOS can stay independent, as an employee of HBOS I view the take over as bad for customers and employees.
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What a farse! I have for some time now procrastinated on the utter stupidity of the chairman / chief executive merry go round that exists.
How can it be that two of the guys partly responsible for this mess in the first place - the seeds of the credit crunch were sowed years ago - can be seriously considered to run HBOS?
Its a boys club Bob and however you package it up, most folk now realise that at the board level of any big company, the oxford cambridge etc brigade will come up smelling of roses no matter what.
If this does go through Bob, I would be internally greatful if you would keep us posted on the whereabouts of Stevenson and Hornby - large payouts then CH and CEO at General Motors maybe? lol
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@#16 chickangawa
"An independent HBOS would be the ideal solution"
They were independent until they were brought down by the trickery that Burt and Matthewson still espouse.
They were saved from ruin courtesy of the British taxpayer, and the people that put them there dare to open their tainted mouths and regard themselves as 'respected'.
An independent HBOS would be an ideal solution for LTSB, and for HBOS shareholders.
But HBOS will never become independent until our bailout money has been refunded and the bank has been denationalised. Until the system has been purged of its toxicity this will never happen.
I wouldn't trust these two charlatans, who are part of the poison, an inch; they should never be let near a till again.
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#10
My point?
There would be no HBOS today if Lloyds had not stepped in when it did. Take a look at the graphs. Take a look at the exact time when RP broke the news. HBOS were on the way out. Its too easy for people to turn up after the event and start pitching for a business they claim has more value. The fact is, the only reason HBOS has ANY value at all today is because of Lloyds.
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The point which seems to have been missed is that the combined mega bank will have synergies and economies of scale enabling it to compete more effectively with global players such as HSBC and Santander.
Lloyds Banking Group expects to be able to redeem the government?s preference shares within 12 months.
Robert, the Treasury has made it clear that new capital from the taxpayer is only available for the combined group as investments in HBOS and Lloyds TSB individually would be far too risky. With LIBOR currently denting profit margins, could this be why there have been no genuine alternative bids from the market?
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Burt and Matthewson would make a welcome return to boring banking.
The Edinburgh/Scotland question is central to this given the current political landscape.
Labour cannot afford to alienate an already fragile Scottish vote. Nor the vote in Yorkshire.
With a general election possibly less than 6 months away this is a critical juncture.
LTSB are forcing the "merger" onwards, even to the extent of selecting executives pre-shareholder vote. This is a welcome intervention for shareholders, customers and staff at both banks.
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Re: post 6
A large percentage of HBOS shareholders may be individuals due to the demutualisation of the Halifax but just like every other Footsie 100/250 company the vast majority of the actual shares are held by institutional investors. These 'suits' don't ever use their voting rights to do anything but maintain the status quo, thus explaining how the chief executives of many companies continue to receive their vastly inflated remuneration no matter what their actual performance is...
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This latest news is simply political posturing of the SNP variety, designed to ring fence jobs in Edinburgh.
The only way HBOS can stay independent is for existing shareholders to stump up 100% of the fresh capital rather than the government.
Given the massive fall in the share price in the last 12 months that seems highly unlikely.
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#25
The LIBOR rates are at 2004 levels (see MSN). This has nothing to do with sqeezing profit margins-the banks are not lending to each other-effectively the LIBOR rate is redundant. Banks now have to raise capital the old fashioned way to cover their ridiculous lending spree and selling of bad debt.
They are having to do on a gargantuan scale what the rest of us are having to do-save to fund day to day living, rather than borrow from one to pay another. Their assets have vanished like house prices have fallen, so they have no security to offer when they want to borrow money.
Difference is, of course, we can't pay our debts or get a loan to pay ourbills we go bankrupt and lose our homes-the banks get a loan from the government!
Who does the government care about the most? As if you didn't know already!
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Lloyds Tsb-HBOS merger is the best thing that can happen for HBOS employees and Shareholders. Till date HBOS has 'play the game culture' which is being driven by senior management. Senior management has never demonstrated an ability to think long-term. HBOS is a sales organisation and not a bank and the credit crunch has exposed bank's poor risk management and sales driven culture. For once we need a management that thinks long-term, understands business and risks and is not sitting there to tick the boxes and I believe this will only be possible if this merger goes through. Sir Peter Burt and Sir George Matthewson will struggle to change the culture whereas Lloyds is in a much better position to drive the banking culture as each every practice will be challenged at all levels.
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Yes good idea,,
As I see it jobs are the most important issue..
Lloyds HBOS are using Tax Payers money, if there is mass redundancy the Tax Payer gets hit with a double whammy. Not only have they bailed out the Banks but they will also have to foot the bill for all the people made redundant claiming dole or job seekers allowance.
Mr Brown and co must remember that there is an election fast approaching. One can guarantee that if he does not protect jobs he and his party will be ejected from government and into the wilderness for many years.
Also the Scots must understand that its more than their jobs at stake, it?s HBOS in the whole of Great Britain, united they stand divided they fall; forget about the them and us mentality.
As I see it HBOS should be allowed to continue
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Post 9. Sagamix
Hmmmmmm...do you mean like a Stalinist state monopoly? Would you be happy with that?
Do you also want less energy companies? Less supermarket chains? Less clothing retailers? Less car manufacturers? I could go on and on and on!
Competition creates more choice and lower prices for the customer in the long run. Fact!
This financial crisis is a 1 in a hundred year event it seems..........so I suppose that like flooding in this country we have to accept that every so often, the capitalist system that has provided us with so much advancement, prosperity and opportunity will burst it's banks ( literally!) before receding back it's historic and productive flow.
In otherwords, don't judge capitalism through the 1930's depression of even this crisis. Judge it over the last 200 or so years. On that basis it is a very healthy model to generate the economic well-being for our nation and the world.
Capitalism needs competition to thrive which is my prescription.
Sagamix, you are wrong to profer less competition as a solution to our problems.
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#24
Your point about where we were is well made, however, as I said it is where we are now that counts!!!
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There is a report in today's Guardian that Sir Terry Leahy of Tesco 'leant on' the Governor of the Bank of England to cut rates.
I've no idea if this is true, but when Tesco control 30% of the grocery market, it is not too difficult to imagine.
Won't creating a 'Tesco' of the financial services world create a behemoth which will try and control the government, rather than the other way around ?
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"A pair of the best known and most respected bankers in the UK"
And their recent track record ?
cheers
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FROM MY EXPERIENCE WITH THE HALIFAX END OF HBOS,ITS GOES WITHOUT SAYING THE CURRENT SENIOR DIRECTORS SHOULD GO,ALL OF THEM.
ONCE AGAIN :I ISSUED A STATUTORY DEMAND AGAINST HALIFAX PLC IN NOVEMBER 2006.
GUESS WHAT? THEY IGNORED IT,I THEN WENT ON TO ISSUE A PETITION FOR WINDING UP HALIFAX PLC,THEY DID RESPOND TO A FAXED COPY.
ALL BOARD DIRECTORS & THE COMPANY SECRETARY WERE INFORMED OF THE STATUTORY DEMAND,THEY ALL IGNORED IT.
QUITE CLEARLY THE DIRECTORS ARE UNFIT TO ACT AND ALL MUST GO.
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Baldric
I bet you are anispeptic, frasmotic, even compunctuous to have caused such pericombobulation.
But I must say this one shows you doing your job.
You've even managed to give it some balance.
Very Good.
No Flake in sight.
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As a share holder and bank user of HBOS I shall be voting against the Lloyds take over. As a share holder I do not think that the offer of 0.6 of a Lloyds share for each HBOS is enough and that it should be 1 for 1 at least.
The merger seems to me to have been railroaded in against the short selling fiasco which precipitated the fall in the cvalue of the shares and I, for one, would like a full investigation into the part played by Lloyds in the HBOS share fall. It seems to me that Lloyds have already taken over TSB against its customers wishes and is now trying the same against HBOS against the customers wishes.
I hace never liked or trusted the Big four English high street banks and this action by Lloyds just confirms my original position. I for one shall back the independence movement.
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JUST AS AN ASIDE I HAVE MADE £38 MILLION SHORTING HBOS STOCK.
I DID IT WITH DELIBERATE INTENT DUE TO THEIR SHOCKING TRADING PRACTICES.
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Let's not forget that the ability of Labour to win power rests on it using its Scottish seats to hold sway in Westminster.
Without Scotland, the Conservatives will rule in England for years to come. Therefore, Brown and Labour desperately need to keep the Union together.
Without its banking industry, Scotland doesn't look half so viable as an independent country and SNP support dwindles (see Glenrothes bi-election for details).
It may sound counter-intuitive, but Brown and Labour are desperate to sabotage HBOS's independence, at any cost, to ensure Scotland doesn't look like a credible independent country.
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The banking system is in turmoil and whether we like it or not its stability is paramount...it beggars belief that 3 self-centred egotistical maniacs are prepared to further shake a very fragile system.
The 3 I refer to being, Sir George, Sir Peter and of course the man at the root of this Alex Salmond.
Petty nationalism is not what is needed.
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What this shows is that reality is yet to catch up with HBOS shareholders and ex-employees.
They are arguing about deck chairs on the titantic.
Yet the situtation remains very grim with none of the weekly policy ideas really working. Now the Government has spent its credibility and its money.
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30#
suspect BOS whistleblower could be a double agent,does'nt he know all banks are sales orientated and Lloyds are no different. The writer who referred to the Oxford old boys has got the wrong university and country, it should have been the St.Andrews club.Go on PB & GM stick it to Andy Hornby.
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41# Linking PB & GM to the Scots Nats is an oxymoron!
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if a statutory demand and winding up petition was issued, why weren't they wound up? What did the court say in the hearing? If a winding up petition is issues, then surely the courts follow through-no amount of ignoring by directors will nullify the due legal process!
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Robert - haven't the treasurery already stated clearly that the financial backing the taxpayers are giving to HBOS (and LTSB) are on condition the merger goes through? In which case, aren't the two failed former bosses showing rank incomeptence again?
Why don't people recognise and admit when they've got something badly wrong. These two sirs need to be laughed out of town as they've had their goes and mucked up big time.
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What does independent mean these days? Two puppets controlled by the same master instead of one?
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"The letter-writers argue HBOS no longer needs to be rescued by Lloyds TSB, because the government and Bank of England have offered vital funds to replace those that could be withdrawn by money managers and other creditors."
In other words, they don't need the money from Lloyds TSB because they've been given free reign along with all the other banks to steal as much cash as they need from the taxpayer.
This is exactly why the bailout should never have happened. The banks don't need to rip each other off, they've got us instead for that. We're like an endless cashpoint to them, one that gives out an infinite supply of cash.
The government should have let the banks fail whilst guaranteeing the deposits. A proper bank collapse or two would have caused a few soiled underpants and glasses of boardroom sherry to be dropped. Certainly it would have humbled the few parasites that survived.
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The takeover of HBOS by Lloyds TSB has always been a gross stitch up of the shareholders of both businesses - they should reject it out of hand! It is a Blank-Brown stitch up pure and simple!
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Why does it matter?
If they cant lend they cant survive with their current models.
They along with most other banks will go to the route of Lehmans because there is nothing any Government or institution can do to prevent it.
If or once the balance sheets are stabilised there is still the problem of the exponential lending that is needed to avoid collaspe.
The idea that this intervention will save jobs is quite laughable in the current climate.
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crowdedisland - I refer you to the post I made not long before you. HBOS will get no Gov funding if the merger doesn't happen as that funding was conditional of the merger! LTSB will do fine by not taking on HBOS! HBOS would collapse. All seems clear to me. HBOS was beyond help as an independant entity. Ok, let's take your stance...let SNP And Scottish parliament replace UK Gov bail out money.....there. sorted. HBOS bankrupt and so too Scotland.
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"most respected bankers in the UK, Sir Peter Burt and Sir George Matthewson, are attempting to blow up the takeover of HBOS by Lloyds TSB. Burt and Matthewson - the former chief executives of Bank of Scotland and Royal Bank of Scotland"
Most respected bankers? Still? Even after both their banks nearly collapsed? Who out there respects them now? You mean disgraced bankers, surely?
The crazy upside down mirror land of banking, like a parallel universe where the rules are all wrong.
Its inverted shadow logic is an endless source of amusement to me.
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"Two of the MOST RESPECTED" bankers in the UK????? They may have been good at aggressively increasing the profits and dividends paid of the institutions they were responsible for when the times were good and life was easy, but they showed gross irresponsibility, neglect, lack of due diligence and incompetence when the "seven good years ended and the lean years began"....Frankly any statement they make other than to the Fraud Squad should be heavily discounted and possible used as evidence against them....
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As per numerous posts on this subject, why trust 2 "bankers" who have, as recently as the past 2 or 3 years, been in charge of RBS & BOS - the 2 banks most in trouble.
I'm certain that the activities that have now almost brought these banks to their knees were started and continued under their"watch". Indeed Mathewson only stepped down as chairman from RBS just over 2 years ago....Mind you, he didn't have any control over Goodwin and was probably blind (or blindfolded) to what was going on!
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Who was the Captain of the Titanic anyway?
Was he the one of the most respected and best known Captains in the land?
Even after he hit the iceberg? Or was his ship-Captaining ability called in question after a sizeable proportion of his passengers drowned?
That's how these things should work shouldn't they?
maybe I'm missing something.
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This is another example of banking fat cats taking the taxpayers money then scheming to make it work to their own advantage. There is only one legitimate test of the proposed merger, is it in the best interests of the tax payer, or not?
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Well, it is a right royal mess isn't it.
Although I have no love for banks or taxpayers funding them, I actually think loosing a big player like HBOS would be so much worse for competition in the market place that I see supporting them so that they can remain independent is the lesser of evils.
If the merger (takeover) goes ahead, then we are probably looking at anything from 25,000 to 40,000 job losses at the new mega bank. Ultimately, we as taxpayers will end up footing the bill for all the fallout from that number of job losses, and that seems too high a price to pay when supporting the independent HBOS at least saves a goodly proportion of those jobs not to mention the small possibility that there might even be a profit on the sale of the taxpayers stake in the years to come.
Anyway, if there are any clever souls on today, can anyone comment on the sudden drop in Central Bank reserves from August 2008? My personal view is that it will cause rampant hyper inflation for countries issuing the reserve currencies, mainly the USA, UK and EU, but I am open to other interpretations. See the graph at:
http://www.plata.com.mx/mplata/articulos/articlesFilt.asp?fiidarticulo=89
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As a HBOS shareholder I hope these respected bankers succeed. They offer better option than being overtaken by Lloyds for a very small price.
Ratio of 0.605 is far too low. The idea of takeover is good in principle but the ratio is just not fair.
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where is the money for this takeover coming as both parties had injections of public funds it seems they niether needed or deserved.
during this recent downturn did the banks suddenly plead poverty to protect there profits or do they expect the people of this country to believe they hace suddenly found loads of money hidden under there colective mattresses.
this take over should be looked at openly and the funding of it be questioned and any missdeed doers be brought to book.
the governments role in this cannot be ignored either as they lent the public funds on a no interest deal that only profits the banks.
altogether there are some strange happenings in this sector, are we being played by corrupt banking and government?
there needs to be an independent impartial enquiry into this whole affair so that the people will discover who is at fault and whom to trust.
but i doubt this control freak of a government would allow such a thing.
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I would be considerably more impressed with this proposal if it came from anyone but the "odd couple" of Scottish banking.
What we desparately need is a complete change of attitude and approach in UK banking. These two only represent the old school.
Even though I am a solid supporter of Scottish independence these blokes are not what we need to help grow either the Scottish or UK economies. Unless someone comes up with a plan as to how these banks will reconnect themselves with the real needs of the economy then in all honesty I'd rather see the whole darn lot collapse. Keeping shareholders happy should not be the priority... Keeping customers and the country happy should be and logically if they are happy then shareholders will also do well.
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Peter Burt was one of the main men at the helm at Bank of Scotland when it was trumped by RBS in its bid for NatWest, leaving it exposed. The board hurriedly sough a bedfellow to 'merge' with, hence the Halifax 'merger'.
I don't see anything in his previous performance to make him a respected figure.
I am a Scot but certainly do not have any nationalist tendencies, and believe that HBOS can only continue through a takeover - without the Government money where can HBOS go to fund its activities? Unless Mr Burt has friends in the Middle East?
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Bank of Scotland relinquished their independence when they merged with Halifax. They are now part of the HBOS Group. It will make no substantive difference if they become part of the Lloyds Banking Group. Lloyds have already said they will keep the Scottish Headquarters and keep printing Scottish bank notes. They are obviously therefore committed to keeping the Bank of Scotland name. Without Lloyds, HBOS would already have gone to the wall. Their capital position is impossibly weak and if there is any value left in their balance sheet they will be taken over even if this particular deal doesn't go ahead. Do people want them to be taken over by a Spanish or French bank that will change their name entirely, strip the assets (the customer base) and leave them in the gutter?
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Fine by me. I've no objection. If HBOS can make it on its so be it. Remember that the merger was only put together when the stock markets were panicing and HBOS was a target despite it supposedly being well capitalised. If things have calmed down now and HBOS is genuinely a viable proposition on its own that's OK by me. Particularly if the new HBOS has altered its business model and will be OK in future...
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No 39 (The guy who made 38 million for shorting HBOS shares)
These people are really thiefs in law, immoral people. Speculators (unlike investors) are bad for the market and steel money from ordinary people in a permitted way.
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Reply to No 60
These respected bankers are from old school, This is good. They are not "infected" by modern funny financial schemes that brought us into this mess.
Old style maybe good style. They have big experience. I trust they have substance behind the words.
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I really hope that this move succeeds. Since Alistair Darling confirmed that government funds would be available to HBOS should it remain independent then the acquisition has never made any sense, especially at the price offered.
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Tut, tut, Scottish politics are at the root of this intervention not good business sense. You cannot put the clock back, at the point the authorities intervened, HBOS was going to the wall. Could the UK economy safely have survived a failure of that magnitude? No. The only reason it appears that the banks do not need all of the money now is that the money will be injected and the market has steadied on that expectation. I do not want to see the experiment conducted of reversing that decision. Furthermore, Barclays did not borrow from HMG and look at the price of their additional capital. Do the consortium want that result for HBOS??
It may be unplalatable for the Scots to realise that one of their institutions may merge with an English one, they were happy when they bought Halifax BS. They are not a seperate state now and they are not thinking beyond their sectional interests.
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An independent HBOS would be the best news for the customers. Lloyds TSB is obviously trying to get it on the cheap! bad news for the shareholders. But above all, if Government is prepared to bail a joint Lloyds HBOS, why can't HBOS also be backed by them like other banks. What is so very different about HBOS, that it can only be backed if it is stolen by LTSB. As a customer and a shareholder, I would much rather HBOS went on its own, we the shareholders would be willing to back it and prevent loss of jobs!
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#13 @CAM_Edin
I made - and intended - no judgement on the abilities of either of these men. My position was based on this principle:
"anyone who is capable of getting themselves made President [of the Galaxy] should on no account be allowed to do the job" (Douglas Adams)
Self-recommendation is usually the province of the politician. On that point I rest my case.
With regard to the ability and the track record of this duo, I still have no view, not possessing the requisite information. However, I note that support for them does seems strangely lacking in the most recent comments...
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I said on the following day that the deal lacked any real logic....once the government had in effect, guaranteed ALL banks...anyway, by the liquidity provided and the actual capital in return for shares..
Given this the deal simply looks opportunistic.
Many people in this online community said the same thing, I wasn't discovering some marvellous revelation....
The deal should be stopped in order to preserve competition in the future when things will settle down...be that 2010/11/12 or whenever.
To be honest I would like to see even more radical proactive restructing--- as really we are responsible for all the Banks in this country with the possible exceptions of Barclays, HSBC and the Santander group...and even here it's an argument about how independent they are.
Splitting HBOS back to 'Halifax Building Society--and Bank of Scotland...NOT selling Northern Rock back to 'the 'private sector' ---but reconstituting it as a mutual---and even taking Cheltenham and Gloucester back to independent mutuality as the price Lloyds TSB pays for it's support....
i.e. a joined up piece of work to restore competitive mutuality to the Mortgage market in a framework designed for post-credit crunch stability.
Otherwise we'll end up with even more "too big to fail" banks with bankers all troughing at the bonus pot knowing if it goes wrong there would be even less chance of them suffering that there was in 1998-2007.
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Shareholders stitched up by bankers?
All of us, the whole country, have been stitched up by these people, and by the dozy, incompetent government that's supposed to be keeping an eye on things.
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"This leaked letter represents a very serious challenge to the Labour government's plans for a Lloyds takover of HBOS. " ... wrote minuend, 8. At 09:58am on 08 Nov 2008
That was pretty close to the dodgy deal, minuend, but should have read/have been written for accuracy's sake ..... This leaked letter represents a very serious challenge to the Labour government's plans for a Lloyds and HBOS takover.
And the vast improbability of that conceals its stealthy action to impoverish and enslave the nation to debt transferred to them on the whim of Fools sat around the Tables of Power rather than Control.
And why only such Largesse to Banking's Fools and not to Business, which actually keeps them in Business.
It makes one wonder whether they are a necessary evil ... or just a self serving invention with no Assets and Intellectual Property of their own for Sale or Hire .......therefore, in Reality would they be, Parasites'r'us Inc.
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Is it not quite clear that neither Burt nor Mathewson were in command of a bank at the time of the Credit Crunch shambles. Why do so many clever clogs impune their credentials on this blog?
It is equally clear that both the customers of B of S and the individual shareholders are backing an independent HBOS on this blog.
As someone who has been a customer of B of S for several decades and currently an investor I wait to see if Lloyds gets its way. If so I and my money are off to pastures new.
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Surely shum mistake??
Aren't Burt and Mathewson the two experienced Bankers that had got their respective banks into this mess in the first place? Isn't the bailout from the government to strengthen a 'super' bank rather than two mid-sized ones? Surely the strength on this merger is the spread of financing risks that the combined bank would provide, a stronger depostor base, less requirement to depend on the wholesale markets and better rates from those markets when needed?
This is a ploy by two has-beens to pump up their pensions which have been decimated by their own banks' incompetences.
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#67 Surbiton Steve
You said "It may be unplalatable for the Scots to realise that one of their institutions may merge with an English one, they were happy when they bought Halifax BS. They are not a seperate state now and they are not thinking beyond their sectional interests."
Actually I and many others were very concerned when BoS bought The Halifax because it indicated that BoS was off on a track which would strongly diminish its ability and interest in growing and developing the Scottish economy.
We took the same view when RBS started expanding into China and elsewhere overseas.
The view was simple.. These banks had a job to finish off here and should have got on with that first.
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For the past 7 years, while the bankers have been recklessly destroying the economies of the west, whilst making themselves super-rich, the "government" has been asleep.
They have now all woken up, much too late, and are realising what they have done.
Our young families futures have been ruined, and wealthy bankers will be picking up the wreckage of their lives at bargain basement prices.
Sympathy for shareholders, no.
Sympathy for bankers, no.
Sympathy for the ordinary young family, yes.
Our sick, sick financial industry should hang its head in shame, and so should new-labour.
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If the Government had put in place the current funding options, Norther Rock would have either been a sound institution or part of Lloyds TSB, depending on the timing of the funding. If HBOS is to now remain independent then I think the Lloyds TSB should be given the option of purchasing Northern Rock, from the Government, at the price it offer last year. (Can anyone explain to me why it is that the two banks now nationalised, Northern Rock and Bradford & Bingley, are charging the most for loans, repossessing the most houses and thereby damaging their shareholders - the Public whose purse they keep taking from? Twice!!
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To everybody complaining about the bankers "self-recommending themselves":
I'm assuming you all have a job. I'm sure most - if not all - of you applied for your job. That's self-recommendation. You're saying to the potential employer that you think you have what it takes to work for them, which is what these two guys are doing.
Why be hypocritical and say other people shouldn't do the same thing that you do?
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I could not agree more with 67.
Mathewson lost the right for an independent Scottish Bank when RBS took over NatWest. As did Burt by the unsuccessful bid for Natwest which meant BoS had to merge with Halifax.
It concerns me who they will consider for their replacements should HBOS remain a seperate entity. Hopefully not the outgoing CEO for RBS.
Just because the Scots are more vocal and better at lobbying should not mean one part of the HBOS workforce should get better treatment than others in the UK. So let the shareholders decide. If LTSB are successful, as I hope they are, let their management decide where jobs should go based on picking the best team and not pandering to regional bias.
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# 8
FAO MINUEND
If you actually took the time to read this letter you would have established that it their intention to make it public:
?20. Given the importance of HBOS to all the various stakeholders, and the time constraint to articulate our position we feel it is appropriate to release a copy of this letter to the public?
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Sorry to be cynical, but it seems to me that this is a no-win situation. The best solution is choosing the lesser evil.
I personally am against the merger.
I am against Scottish independence and do think that Salmond's motives are entirely in the wrong place, but being something of a nationalistic hypocrite myself, I'd like to see England getting something back from Scotland for a change.
I would also like to see Lloyds able to compete with HSBC, Santander, and - until it crashes out completely- RBS on a global scale. It just feels like, once again, England is losing its ability to be a major player in its own right, and is just becoming a playground for European banks and multinationals to operate in.
That said, I don't think having those multinationals in the first place is particularly good for anyone. As has already been mentioned, competition is vital if we are to preserve the interest of the consumer. We don't have proper competition in UK (or world) banking, but that doesn't mean that we should give up hope and wave in the mega banks.
Does capitalism serve society or does society serve capitalism?
Efficiency is important, but economies of scale aren't everything. Right now, we need jobs, and, if it is as Robert suggests and keeping 50,000+ jobs in the economy costs the government a short term loan or two of a further £2.5 billion, which will ultimately be profitable, I think that presents good value for money.
(I only say 50,000 because there will be job losses, even without a merger)
Of course, everything I've said is hypothetical, because the government can't afford another U-turn. It has, by some complete fluke, managed to regain some of its economic credibility (apparently sticking a bandage on an economy you've run into the ground is good enough these days). Brown will put his own party above the socio-economic interests of this country.
That's why he needs to go
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# 72
Perhaps you should also read the actual letter [made public NOT leaked] before responding about it:
?20. Given the importance of HBOS to all the various stakeholders, and the time constraint to articulate our position we feel it is appropriate to release a copy of this letter to the public?
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As a HBOS shareholder - Thank you, Sir Peter Burt and Sir George Mathewson. You give hope to HBOS stakeholders.
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The HBOS Statement, reads like a Downing Street press report:
http://news.bbc.co.uk/1/hi/uk/7717523.stm
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67# & 75#
At least get your facts right,Haifax/Bos was a merger not a takeover with Halifax holding the upperhand and the 2 top jobs were Halifax people.
Another fact, Peter Burt was last in control of BoS almost 7 years ago.
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The Govt has taken action on the banks. They have taken action on interest rates. They have won their by-election.
CAN THE GOVT PLEASE NOW ACT TO STOP THE INSOVELVENCIES, REPOSSESSIONS AND COURT ORDERS being imposed on defenceless individuals and firms all over the country as a result of a mess they did not cause.
CAN WE PLEASE HAVE A MORATORIUM ON THIS.
BIG FINANCE HAS DOMINATED ALL THE STORIES ON THE BBC AND ITS WEBSITE FOR WEEKS. CAN THE BBC PLEASE NOW GIVE SOME IMPORTANCE TO THIS.
SOMEONE IS BEING BANKRUPTED AROUND EVERY 4 MINUTES IN THE UK.
!!STOP THE DISPOSSESSIONS!!
GC
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Revision of my post #20 to satisfy moderators...
This deal was a arranged by the 'Scottish Mafia' that inhabits Downing Street.
(I hope Scottish Mafia is an acceptable term - it has been used by BBC correspondents before before)
This was evidenced by the agreement to maintain Scottish jobs, following lobbying by the Chancellor just a day after he organised the deal!
The job's in Halifax were never mentioned.
The break up of the deal will be good for competition. It avoids setting a precedent for other mega mergers - how can a two banks with perhaps a combined market share of 20% be refused the opportunity to combine in the future so as to 'effectively' compete with a single one, put together by the Government, with a market share of perhaps 30%?
Once the Government agreed to the bail out of the banks it should have immediately reconsidered the Lloyds deal - particularly as both organisations will be relying on the bail out even with the merger going ahead!
If the merged group was to require no taxpayers money the taxpayer might have a benefit in return for the lack of competition. But as it is we have seen that the taxpayer will be needed to bail out this super bank, resulting in less competition - to the long term disadvantage of the taxpayer.
The Banks are already playing hard ball over the terms the Government said it imposed on the banks in return for the bail out...
They want to be able to pay dividends early (by agreement to being allowed to repay the Preference shares early - so limiting the upside for the taxpayer without removing the downside). Whilst this is in the taxpayers interest that the money is repaid, there should be early redemption penalties.
You will not find proper commercially arranged bail outs (Barclay's with the Arab Royals for example), allowing for early redemption at the banks decision, without any compensation - ans that is where the terms are far more severe to start with than those the taxpayer has imposed through the Treasury.
What was claimed would be Government appointed Directors on the Boards, now turns out to be little more than agreement to the names on the shortlist.
There is also another key benefit to the break up of the deal - there will be no job losses. That must be good for the economy, and if Brown was true to his word, that his focus from when he wakes to when he retires to bed is on British families, there jobs and financial security, he must prefer an arrangement that does not require job losses to one that will result in thousands - at a further cost to the taxpayer through State benefits.
The Lloyds HBOS deal is bad all round for the taxpaying consumer. So who does benefit?
I'll be watching out for political donations from the new group if it goes ahead.
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It's an open secret in Scotland amongst hacks and both pro- and anti-Union parties that the HBOS/LTSB/RBS issue is POLITICAL, NOT FINANCIAL.
If either HBOS merges with LTSB, or RBS gets taken over by a European bank, Scottish independence, and with it the SNP, will be dead. An independent Scotland would not be able to survive without its financial market based in Edinburgh. If these big banks were to pull their decision making out of Edinburgh, its financial market would not have enough of a critical mass to continue. Who would be next? - Standard Life?
The hacks don't want to speak up, in case they seem to side against the winning side.
The pro-Union parties don't want HBOS to survive as a separate entity. Combining it with LTSB would seem to show that the Union 'saved the day'. Of course, the pro-Union parties don't want to speak up as they'd look like they'd put the knife in HBOS and the jobs which go with it.
The anti-Union parties need HBOS to survive as a separate entity. They know that Scotland needs its financial market to be independent if Scotland was to survive as an independent country. Of course, the anti-Union parties don't want to speak up as they'd be shooting themselves in the foot if HBOS finally DOES merge with LTSB.
Where there's a will, there's a way: if Labour WANTED an independent HBOS, it would just make it happen. The logic, reasons and framework have changed since the September merger announcement, so they'd not look as if they're doing a U-turn. Basically, they need HBOS to be taken over to kill off the SNP independence threat.
Of course, none of this is deliberately done, it's just all sides have their own view of the logic of the future.
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The HBOS response claims it is a good deal for shareholders...
"The board believes that the deal with Lloyds TSB is a superior proposition. That deal provides long-term financial benefits to HBOS shareholders. The new group will get synergies of at least £1.5bn.
In addition, the new group will be a very significant financial services player with a clear funding profile. That is very important in these uncertain times."
Who speaks for the taxpayer / consumer / redundant employees?
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#38 et al "As a share holder I do not think that the offer of 0.6 of a Lloyds share for each HBOS is enough and that it should be 1 for 1 at least."
The market disagrees! HBOS has always been worth less on the stockmarket than the LTSB offer. On Friday's close an HBOS share was worth only 0.52 LTSB shares. The more uncertainty about the takeover, the lower HBOS shares have been. This is a capitalist reality - if you don't like it you shouldn't be in the stockmarket to start with.
As an HBOS (and a Lloyds) shareholder, I believe that this takeover is my best option. I then want all senior HBOS management cleared out. These banking problems have been years in the making, so I would not trust any past senior management from RBS or HBOS either. Boring old LLoyds has been the only soundly run major bank in Britain since the millennium.
As for jobs, we need a smaller banking and financial services sector, so that we can refocus GB.plc to the real global economy. At the moment, any surplus jobs retained would not be real, but taxpayer subsidised. This money would be better invested in other things.
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58. At 12:50pm on 08 Nov 2008, VitaliG wrote:
As a HBOS shareholder I hope these respected bankers succeed. They offer better option than being overtaken by Lloyds for a very small price.
Ratio of 0.605 is far too low. The idea of takeover is good in principle but the ratio is just not fair.
-------------------
Erm, excuse me but as a shareholder you take a risk. If this plan is for the benefit of shareholders then it is not worth doing. I'm owned shares in companies and taken the risk.
And these two individuals are acting in self-interest in my opinion.
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#89 well said. What about them?
Not that anyone much seems to give a hoot, except that I do and write here often on the SAME OLD THING.
I gave some advice the other day - as I often do - to a particular hard-working young man who happens to be a Northern Rock customer. I helped him simply because I know how to and because I happen to think people matter and because he was quite evidently worried sick though trying to be brave about is and unable to concentrate on his work because of it.
Regarding repayments of a home improvement loan taken out in better times that he had very sensibly and quite properly renegotiated thru a debt management firm to reduce his outgoings to a sustainable level in the recent difficult months. He and his heavily pregant wife - on maternity leave - were getting in excess of 15 phone calls a day (and at night) on 3 telephones (incl 2 mobiles) from a character acting on behalf of one of the banks under discussion here threatening them with all kinds of consequences if they did not pay more money and faster.
I printed off the OFT guidelines on the subject and drew his attention in particular to their advice on HARASSMENT - which it was.
I am pleased to say when the words were quoted 'chapter and verse' to the persistent fellow who was calling them he stated that he was 'only doing what he was told' and abruptly rang off. The calls stopped and a new arrival joined the family and the payments have continued to be made in the agreed way.
I cite this as one example among hundreds I know of just to draw attention to the REALITY of how, behind the suits and headline smiling faces, some financial instituations are treating customers who are doing their BEST under the most alarming and difficult circumstances.
This man's MP could have done this but chose not to help in any way.
I am more and more shocked that Parliament is BLIND to the trainwreck facing people and that they clearly (due to inaction) seem to think that it is ACCEPTABLE for people to suffer in this way and I assert AGAIN that the whole affair is an indictment of the shameful state of democratic representation in the UK and that the Government incl the PM and the Chancellor (who seems to spend his entire day talking to banks) are COWARDS and the UK is a nation of LIONS led by DONKEYS.
If you don't agree I don't care and if you are insulated from this good for you but if you do care I want to hear from you.
GC
Lincoln, UK
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@90 sashclarkson
I too am an HBOS and LloydsTSB shareholder.
I am voting against the merger because:
1. Lloyds TSB needs HBOS like a hole in the head; a government fudge and they are not to be trusted.
2. HBOS will fill up its coffers with taxpayer's money in any event, and when the shareholders sack the board for gross incompetence it has a chance of becoming respected, recouping the losses, paying back the debts, and becoming profitable.
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I am pleased to hear that two eminent bankers agree with my own view, formed at the time when the takeover was announced, that it is a bad deal for HBOS shareholders.
The Lloyds TSB exploited the panic of HBOS executives, when it looked as if there was about to be a run on their bank. They agreed to sell if off cheap, thereby protecting their own golden handshakes.
Lloyds TSB made its bargain even better by exploiting a meeting with the PM at a private party, to get an off the cuff assurance, that the merger would not be blocked by the government, even though it would give Lloyds TSB much too large a share of the market.
The deal should be blocked in the interest of shareholders and the public.
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If the merger of Lloyds and HBOS fails, HBOS' shareprice will collapse and with it HBOS-unless the UK government steps in-but they already did that with Lloyds TSB, they won't take kindly to this being hijacked by a couple of old bankers who have nothing but hot air and high opinions of themselves to offer. HBOS was about to capitulate in the same way that Northern Rock did a year earlier but this time someone was willing to step in and rescue HBOS and give shareholders something for it. Thank you Mr. Daniels.
Lloyds has proven that its management is sound and was much more cautious prior to the credit crunch and so as a shareholder I trust them to sort HBOS out. I don't think Mr. Mathewson and Mr Burt will help, I believe they are part of the problem not the solution.
I also object to the way false rumours were spread around last week suggesting a second bid was imminent. No bank has the balls to stick its neck out in the current climate. HBOS needs to borrow something in the region of GBP100bn (many times more than what N.Rock needed) and fast plus extra capital to mop up all the losses in its commercial real estate and construction portfolio and its non-conforming loan book. I'd be suprised if our dynamic duo could muster up anything like this sum.
The prospect of job losses is horrendous but sadly we need to reduce capacity in the banking sector which had become one giant bubble.
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90#
Wanting is not getting, Lloyds have indicasted that 2 HBOS people will be in their top seven jobs!The best of both should be selected.
The UK's balance of payments would head south if, as you want, the financial sector was shrunk.
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The Scots caused 2 major institutions to collapse ( Natwest and HBOS). Now the Scots want the English to bail out Scots jobs with taxpayer money. Sorry. What about the jobs lost in Halifax.?
HBOS is in such bad condition, it is not a "going concern", so it would have to be nationalised, and shareholders loose 100%, taxpayers puts in £20bn, and Birt and Mathewson are employed. Great.
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Neat letter, if you read it attentively (and if, unlike some Directors, you are not too 'tired'...). And of course these two Muppets didn't write it themselves - they've agreed to 'front' for an initiative that looks, from an accounting and legal point of view, just credible. As a half-Scot, I half-wish them well. But more broadly, this IS how the 'market' works. Let's see how the market rates it come Monday.
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#81 Bringiton8989 said he'd "like to see England getting something back from Scotland for a change"
Look... You've had all the revenue from N Sea oil, flogged off our whisky industry to overseas companies and sold our largest power company to the Spanish... At the same time you've invested as little as you can get away with in what industry we have left and in the "good times" creamed off all the profits from our financial services industry.
I think you've had enough already.
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They have got to be joking- George Matthweson is a Scot Nat who only came out when he stepped down from RBS and he was the main architect of the flakey global ambition and lending practices of RBS that caused them to need a bale out- HBOS have used Halifax depositors money to fund very dodgy deals with ridiculous gearing and in fact have kept a lot of pretty mediocre Scottish companies afloat and in the acquisition game- look at Grampian Foods as an example. HBOS was bust before LLoyds came along and as taxpayers we should only support Lloyds with HBOS- I think the amount of support for Lloyds and HBOS together will be less than that required to keep HBOS afloat on its own.
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Were these not the guys who have bought RBS and HBOS to their knees in the first place? And why should the UK taxpayer subsidise Scottish jobs put at risk by dodgy management in preference to any others, Mr Salmond? Methinks he doth protest too much.
The inevitable consequence of a reduction in interbank lending is the merger of banks so that such lending is less necessary because there are no transparency issues.
Let's get the banking system working properly first. Once the interbank trust and lending is restored, then we can think of competition. That will take some months as all the deals need to be disclosed and unraveled so we know what are the real risks.
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After a week at the financial coalface our great leader nearly choked over his porridge when he was told of the two tartan knights trying to sabotage his work. Without the English taxpayer there is no financial rescue package for HBOS do they not ken? Do they really expect our dear leader to expend even more of his valuable time on telling the world at large that he got it wrong? Desperate times call for desperate measures so even if Lloyds are given a taxpayer funded umbrella to 'rescue' HBOS so be it. The pot of gold at the end of the rainbow which our dear leader has dangled in front of the Lloyd board is a hell of an incentive. With some suitable financial alchemy, some costs taken out here, some jobs lost there the high road to Scotland is a tempting place to travel. Given that there might be a short period of say 12-18 months when Lloyds is unable to pay a dividend to its shareholders this is merely a minor issue. Out of the wreckage our dear leader will give Lloyds shareholders a cracker of a Christmas present. The new Lloyds group should emerge as the largest player in retail banking having used a taxpayer funded rescue to takeover the assets of HBOS. Now our dear leader is furious with the two tartan knights because they do not seem to remember that the market was shorting HBOS to oblivion until he jumped in with his imaginative and daring plan to spend our money to finance the expansion of Lloyds. The fact that our dear leader is thick skinned enough to suffer the critics such as the European Commission who suggest that his handywork has left the Country terribly exposed to this downturn should serve as warning enough to the tartan duo to take their tanks off his lawn. Also remember the instructions given to the hired hands at the Brown Broadcasting Corporation to refrain from words such as crisis whose idea was that?. Is it any wonder that our dear leader sometimes feels like chucking the whole thing into the hands of an intellectual gadfly like Gideon the gossip? Our dear leader showed tremendous courage in refusing to react to the titltattle in the Torygraph which is alleged to have arrived courtesy of Gideon. As our dear leader told that nice Mr Obama earlier this week there is no thanks for those of us who spend their waking hours thinking through the next ruse that might help to win a general election. So our two tartan white knights should expect no favours if they tamper with the work of one of the great financial statesmen. Our leader is much more concerned about the size of the debt mountain which is growing by the day and how this might be air brushed from the public domain until after the election.
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And another thing ... This "pair of the .... most respected bankers in the UK, Sir Peter Burt and Sir George Mathewson" were responsible for the creation of these failing megabanks, HBOS and RBS, in 2001 and 2000 respectively. I have not heard that they criticised the banking strategies which, under their chosen successors, has led to both banks being almost wiped out.
Nor, at the time, did they care about the job losses involved in the mergers they supervised - so why are they bothered now? I suggest that the motive is political.
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re #78
I have a job which I applied for and therefore, in your words, 'self-resommended' myself.
However I, and most of the employed people I know, did not go to the company we now work for and suggest that the people in the job should be sacked and that we be given their jobs instead. That would be ludicrous.
Ask yourself this - what do Mr Burt and Mr Mathewson have to gain here? Maybe they need a job because their share portfolios in HBOS and RBS respectively have dropped by such a value they can't maintain their lifestyles? Welcome to the real world gents!!
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Reading the bankers letter in full (posted on the BBC web site) , it is apparent that LLoyds TSB's position is worse than that of HBOS. It is a smaller, less capitalised bank with a fraction of the asset base of HBOS, lower profitability and is even more heavily reliant on wholesale funding. Thus the takeover is being engineered to rescue LLoyds and not HBOS.
The media blackout in the last few days regarding the takeover suggests that one or two predators are lurking. If an EU bank makes a cash offer, the shareholders will take it. In the end money talks and the Government can do nothing to stop it. Looks like Gordon Brown has scored an own goal again.
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102
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102#
Too long,unfunny and boring.
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#78 @sjpepper
"I'm assuming you all have a job."
I started this point, and disagee with your implication: very few seem to to have picked it up.
Yes, applying for a a job is form of self-recommendation, when an employer is seeking and you are applying. In this case it is more like "here is a good business idea ... and we are just the people to do it for you, if you finance it." In my book that ranks about par with the guy who knocks on my door and tells me my drive needs tarmacking.
I have owned and run my own business for over twenty years. Therefore not hypocritical by your definition?
I'm also of Scots descent and proud of it - my great-great-grandfather lived at Mavisbank and my great-grandfather was born there. Both are buried in Edinburgh along with other family members. But that connection carries no influence over my view of the HBOS takeover. Nationalism is essentially irrational and no basis for any business decision.
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Damn you...damn you all...I've just sprayed my keyboard with coffee !!
The term "tartan knights" brought to mind the image of two parti-colour armoured beings with pointy visors slashing at each other with claymores whilst leaping about in their kilts !!
Now I'll have to nick the wife's hair dryer to gently get rid of this icky mess !!
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#105 "It is a smaller, less capitalised bank with a fraction of the asset base of HBOS, lower profitability and is even more heavily reliant on wholesale funding."
Lloyds is smaller because it had refused to expand uncontrollably to finance irresponsible gambling on dodgy assets. It's asset base is also smaller because it has few, if any, of the dodgy assets. And it is a lot less reliant on wholesale funding due to its conservative banking practices in the years past.
If it were not for the government insistence/pressure that it take over HBOS, it would not need to borrow as much to keep it afloat.
Perhaps these "tartan knights" have done the Lloyds shareholders a big favour !!
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94:
If the government had followed the accounting rules and the Banking Act properly, there would be no HBOS shareholder (or RBS shareholders and can be continued with other banks) whatsoever, so please leave the shareholders out from the equation. Their holding should have been written off, but the government was panicking. So, shareholders first should publish a letter to the general public thanking them for saving any penny from their investment.
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#96
The UK's balance of payments has already gone south mainly because of the behaviour of our financial institutions
#97
Good grief... The Scots weren't in charge of economic policy or running the FSA so how can u blame us?
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112#
The balance of payments may have gone south but from 1994 the banking sector has contributed a net surplus to the current account on an increasing scale except perhaps for 1995 when Baring Brothers losses had to be accounted fot.
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Without tax payers money their is no bank.
Straw men are easy to find. Those with the money to support a plan are a much rarer animal. If their plan continues to rely on the tax payers largess the immediate and only answer should be no. Reputations have no value if they are not backed up with hard cash in the current circumstances. The crisis has a long way to go yet.The deepest of pockets are needed.
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If any of you are sufficiently interested in the full text of both letters , please don't just accept the prattle of the BBC, log on to the Glasgow Herald website.
Please don't accept anyones word for anything without taking further steps to verify them.
IMF says that the UK is worst placed in Europe to weather the " downturn", unlike the saviour of the pound in your pocket , Gordon the Great .
The BBC and several newspapers would have you believe otherwise.
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@112 Wee-Scamp wrote:
"The Scots weren't in charge of economic policy or running the FSA so how can u blame us?"
Yes they were, they hijacked the government! Haven't you heard of your fellow countrymen Blair, Brown and Darling?
Crooks all!
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Sir Peter Burt was primarily responsible for the "merger" of Halifax and Bank of Scotland, which in effect turned out to be a take-over by Halifax. This has lead directly to the decline, and near-demise of the once proud and well-respected Bank of Scotland. Claiming that he and Sir George Mathewson can save the Bank has little business credibility, and has more to do with political(ie Scottish Nationalist) posturing.
As an HBOS shareholder, whilst the Lloyds-TSB takeover offer is not brilliant, and a bid from the continent may emerge, we need to decide on commercial grounds, not by emotion, and certainly not based on the ABTE(Anyone But The English) sentiments from certain quarters North of the Border.
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So why was it that George Mathewson when he was CE of Royal Bank was so keen to take over an English Bank Nat West when it was in trouble. Are we playing the Scottish card again. About time we separated Scotland and England in our Parliament. Or perhaps the Scottish would like to have some Englilsh MP's in theirs.
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I am amazed at the arrogance of the majority of senior management and directors of banks do they not read the papers listen to the news or read the odd blogs. They have been free at the helm for ten years and within weeks of being bailed out by the tax payer or major investors they are telling us publicly that they know better how things should be done.
I know they gave up listening to customers along time ago after all they are only the fodder who buys the banking fat cats their toys. The fat cats took billions in bonuses to line their pockets with yachts mansions and fast cars by manipulating bundles of worthless products, creating false markets and carrying on practices in their own interest rather than the interest of the banks, their shareholders, their customers, their communities their countries or in the end the world economy.
Of course not every chairman was involved not every director and I am sure many senior managers were all doing their very best to deliver the best results for the share holder. But some where along the line most seem to forget that the money they earn actually comes from the customer without whom none of them would earn a penny salary let alone collect a bonus.
The problem though is this in the last few months, banking world wide has gone very wrong and it is generally agreed that this has been created by the events of the previous few years. Maybe four, maybe eight, might even be ten, irrespective if you were a director in that time either you were drawing big bonuses based on the practices that were going on in the banking world or you were aware of the practices and did not profit but said nothing or you were not aware of the practices that were fuelling the economy and the housing market and the high street frenzy but drew your salary in blissful ignorance of its origins.
Now that being the case until proven otherwise which one of these positions gives any one involved at a senior position running a bank prior to August 2008 the credibility the morality or the ethics to be even suggesting let alone dictating how banks should be run in the future
I am not advocating a nationalisation programme nor any changes to what has so far been suggested but I do feel that a serious review of how banks serve the community and their role today and what we want from them how they should b run under the watchful eye of a regulator who has enough clout to be sure they stay customer focused with high ethical values in customer service at the forefront for the foreseeable future
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#105 Sorry but Lloyds is an infinitely more conservative institution than HBOS. Having a large asset base does not mean you are a stronger bank, it just prooves that HBOS grew too quickly, lent too much and funded this wreckless growth with interbank funding which has now evaporated. Lloyds unlike HBOS hasn't had to raise extra capital until now because it was run better, made less risky investments and relied less on wholesale funding. If Lloyds hadn't stepped in to rescue HBOS, shareholders would have been left with nothing and would have been wiped out just like Northern Rock's shareholders. So stop complaining. There is no European bank in the wings about to step in, wake up and smell the coffee! Banks across Europe are being rescued weekly and every government in Western Europe has had to put together a rescue package to prevent its banks sharing the fete of Lehman or the Icelandic banks.
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There are a number of dimensions that puzzle me about the 'offer'.
First of all it seems to be incredibly arrogant posturing by these two Knights riding in on there white chargers - all the more so for their brilliance does not seem to be supported by market realities.
One very simple market reality is that even with the LTSB offer on the table the HBOS share price plummeted to unheard of depths, somewhere between the LTSB offer price and junk bond status.
Whatever technical interpretation they are placing on revised, or existing, capital requirements the price of anything reflects what the market will pay. Based on recent share price performance LTSB are being remarkably generous.
The offer would seem to be limited to personal and political ambitions rather than a sound, well-backed offer.
Indeed it would seem that every banker in Scotland who is currently out of a job seems to be jumping in on this one. Maybe it will be Fred popping up next with his offer!
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with you all the way GC-check out my previous posts for suggestions.
Re HBOS-the deal was rejected because all the board and chairman would have been kicked out!
The people that matter are being left to rot-stuff the banks, let's look after the electorate-something GB is incapable of doing!
I'm going to start a spelling class now-too many errors on these blogs-I would suggest that it doesn't make anyone look smart if they use a phrase from a foreign language and then spell it wrongly-usually in a post with numerous errors in English. We have a fantastic language-ban Jargonese and use English properly.
After all, what else is left to have national pride about?
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#119
I was a bank manager until 1992-I left because customer service was no longer important. The only thing that mattered was sales. I couldn't abide it-morally and ethically I thought banking was a customer service orientated industry (I mainly focussed on lending). As the changes came faster, I couldn't stand it any more and left before I was fired for not making my targets on making people move their money or having a mortgage completely unsuitable for their circumstances.
I expect there are many more ex-bankers like me-I loved to help people, but that became unimportant in the drive to sell financial products. Frankly, we should let them all rot until they remember how important true customer service is.
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They lead the bank to ruin.
The tax payer more or less saved it.
It is no longer in danger.
So they feel right to take it back.
Where is the 'thank you' to the taxpayer?
...and ..to where next would they drive the bank?
Another hand out?
This is as corrupt as it gets.
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Only the one comment, this just reaks of Scottish Nationalism and the hand of Mr Salmon
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#122
A spelling class - great!
Also a class in grammar?
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spelling and grammar-one would be most pleased to oblige!
He! He!
Let's start a campaign for simple English-ban jargonese in all it's appalling forms!
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Shall we begin with politicians and bankers? Do you think a Maths class would be helpful? After all, it would seem basic addition and subtraction has also been subverted in their quest!
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@127, 128
A decent primary school education would easily be able to take 99% of the population to an acceptable standard in the three R's.
From now on my peepers are peeled!
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Bizarre... two men who presided over the virtual destruction of the banks they used to work for now have the arrogance to suggest that they should be put in charge of another one. Senior bankers really do seem to hail from a different planet to the rest of us.
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It has become increasingly frustrating for us many concerned HBOS employees, that the current HBOS board is still there!
These are the same Board members who took us to the brink of disaster and were scrabbling about for a saviour seemingly found in Lloyds TSB. Where is the independent review that this takeover is the best we can manage, HBOS Board have grabbed on to a lifeline and don't have the decency to resign and let someone else try to salvage this once great company. The hard working staff are still delivering day in and day out. The Board have failed miserably and won't fall on their sword. It's ridiculous that the same Board members are overseeing the takeover - they're hardly qualified strategists are they?
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as an hbos employee and a shareholder how much more restructuirng of the business will continue to happen, how many more poeple will loose their jobs prior to any merger or takeover happening, how much do interested parties know about the constant restructures that continue to happen even as recently as last week with jobs beingaxed left right and centre. how can we be expected to respect any director within the bank when all they seem to be interested in is themselves no wonder staff moral is at an all time low. its not all smmoth within the bank many of us are loosing long serving colleagues every day through no fault of their own, and all of these are tax payers remind me whos money has been offered if the merger goes ahead again?
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banks are dreadful now-the staff in the branches and similar levels throughout each bank are paid an appallingly low salary, this being made up of bonuses in the form of worthless shares! Despite this, the majority are helpful and always ready with a smile.
In return, what do they get? The physical risk of robbery, verbal abuse from customers, and often with no manager to support them. The manager either covers several branches (cut backs and 'restructuring') or hiding in their offices and pretending life on the other side of the counter doesn't exist. Managers have no authority anyway-whatever the computer says goes. Contrary to public belief, staff mortgages are not available for these people, and they are expected to have impeccable finances-no overdraft allowed.
My heart aches for the 'front liners'. Let's stick all the directors in a branch office for a week!
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verse - 're-bellious Scots, to crush . . God save our Queen'. Enough said!
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I do not understand why the Government is so keen on a merger which will reduce competition and make thousands of people up and down the country unemployed. How does that help Team GB?
Surely it makes sense to look at the merger again. Hornby has abdicated responsibility and it is as though Lloyds own HBOS already. As a shareholder I want a Board in place who are going to look out for my interests and not their own.
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@135 heptonstallblogger wrote:
"I do not understand why the Government is so keen on a merger which will reduce competition and make thousands of people up and down the country unemployed."
Ask them, they usually have an ulterior motive.
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I am a Lloyds TSB shareholder and from a purely selfish point of view would wish the outcome to be the best possible for the share price but more importantly with regard to dividends.
The proposed merger of Lloyds and HBOS was suggested before there was talk of the general bail out.
It remains unclear when and at what level cash dividends on Lloyds shares may resume and it is surely in the interest of all parties to at least consider all alternative solutions.
This should not be a political issue but as the government have, rightly or wrongly, contrived to take political advantage from
this crisis there seems little reason to hope that any proposals however tentative will be considered dispassionately.
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