British bank Lloyds TSB on Thursday agreed to buy rival HBOS for £12.2 billion (US$21.8 billion) as the raging global financial storm claimed another victim.
The share price of HBOS rocketed 50.9 percent to 222 pence in reaction to the takeover bid, pitched at 232 pence per share and aimed at creating Britain’s third-largest bank behind Royal Bank of Scotland and HSBC in first place.
“Lloyds TSB and HBOS announce that they have reached agreement on the terms of a recommended acquisition by Lloyds TSB of HBOS,” the pair said in a statement.
Analysts estimate that up to 40,000 jobs could be lost from the banks’ combined 145,000 staff following the deal and that hundreds of branches could close. HBOS has 1,100 on Britain’s high streets and Lloyds TSB 1,900.
British Business Secretary John Hutton is effectively extending Britain’s Enterprise Act to ensure that the deal goes through “on public interest grounds,” his department said in a statement shortly after the deal.
The landmark all-share merger, effectively a rescue plan for Britain’s biggest mortgage lender, comes after HBOS shares plummeted in recent trading following days of global stock market chaos and economic gloom.
Lloyds TSB shareholders would own 56 percent of the issued share capital under the acquisition and existing HBOS shareholders 44 percent.
HBOS, or Halifax Bank of Scotland, is the latest global bank to fall foul of the ongoing credit crunch following the collapse of US group Lehman Brothers, the sale of Merill Lynch and the rescue of insurer AIG earlier this week.
“This is the right transaction for HBOS and its shareholders,” HBOS chairman Dennis Stevenson said in the release.
“Against the backdrop of the very high levels of volatility our industry is experiencing, the combined group will be one of the strongest players in the UK financial services sector,” he said.
Analysts and regulators expressed hope that the rescue takeover deal would draw a line under persistent questions about the funding of HBOS that have dogged its share price.
The value of shares in HBOS — created by the merger of Bank of Scotland and Halifax in 2001 — had slumped 55 percent so far this week.
Many market watchers had feared that HBOS could have faced the same fate as Northern Rock — which was nationalized earlier this year after experiencing severe funding problems and a run on its branches late last year.
HBOS and Lloyds TSB together hold nearly a third of Britain’s savings and mortgage market, but competition watchdogs will not block the deal, which was expected to be completed toward the end of the year or early next year.
The deal was described by regulator the Financial Services Authority as “a welcome move as it is likely to enhance stability within financial markets and improve confidence among customers and investors.”
Also See: Morgan Stanley may be next in trouble
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to