Fears grow over success of Lloyds HBOS merger

11 November 2008 / by Rachael Stiles
There are still mounting fears in the financial world over whether or not the proposed deal which would see Lloyds TSB take on HBOS has been thrown into doubt by two Scottish bankers who wanted to supplant themselves into the control seats of the Scottish-run group.

The two Scots – Sir Peter Burt and Sir George Mathewson – revealed over the weekend that they want the Government to scrap the merger of HBOS and Lloyds TSB, which would probably see Scottish job losses and the disappearance of the Band of Scotland brand, a national institution.

Sir Burt, former Bank of Scotland chief executive, and Sir George, former head of the Royal Bank of Scotland, said they are working on an alternative plan. They believe that a takeover would not be in the best interest of either the public or the group's shareholders, fuelling fears in the Lloyds camp that they deal will not go ahead.

However, the rogue takeover is looking unlikely, as Burt and Mathewson have presented no concrete plans for their bid, and admitted that they did not consult any of HBOS' big shareholders before making it. One investor has been reported as saying that the pair "don't stand a cat in hell's chance" of gaining control of HBOS.

HBOS has written to the duo, explaining that "the Board has unanimously concluded that your letter does not form the basis for any further discussion between us" because it fails to "describe any specific aspect whatsoever of this plan." Chairman Dennis Stevenson also said in the letter that they do not "set out a value proposition for shareholders, or address how your idea would provide certainty or stability for HBOS and its shareholders and customers."

Gordon Brown has said today that "Apart from Lloyds TSB, no serious bid that is funded has actually come forward."

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