HBOS and Lloyds TSB strike deal

18/09/2008

Savings and mortgages held at HBOS have been safeguarded, with the announcement that the firm will be taken over by Lloyds TSB.

The government-backed deal values Britain's largest lender at the fire-sale price of £12 billion.

Pressure for a takeover has been building over recent days, with global stock markets plunging and investor confidence in banks at historic lows.

HBOS in particular has been thought by some investors to be in financial trouble, and has lost around 75 per cent of its shares' value this year.

Therefore, faced with the prospect of a huge mortgage lender going under, the government has apparently stepped in.

The merger between HBOS and Lloyds now creates a new "super-lender", which retains almost a third of the entire UK mortgage market.

"This will be a unique opportunity to accelerate and extend our strategy and create the UK's leading financial services group," said Lloyds chairman Sir Victor Blank.

HBOS chairman Dennis Stevenson added: "This is the right transaction for HBOS and its shareholders."

Up to 40,000 jobs could be lost thanks to the deal, with the two lenders combining their branch networks and other operations. ADNFCR-1819-ID-18786644-ADNFCR