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HBOS dismisses calls from Scottish banking duo to halt Lloyds TSB acquisition

10 November 2008 / by Rebecca Sargent
Following news over the weekend of Scottish ex-banking chiefs Sir Peter Burt and Sir George Mathewson calling for the Lloyds TSB HBOS acquisition to be stopped, HBOS has released a reply dismissing their requests.

According to the reply, Burt and Mathewson sent a letter to the HBOS board on Saturday, which called for the takeover to be abandoned and for them to be appointed as chief executive and chairman of the banking group.

However, the banking duo has failed to make an impact on the banking group, which replied:

"We note that it sets out some of your personal reservations about the transaction and makes it plain that you wish the Board of HBOS to abandon the takeover by Lloyds TSB, a transaction with very considerable benefits to HBOS shareholders, and appoint the two of you as Chairman and Chief Executive.

"Thereafter you would intend to develop an 'alternative plan'. You do not describe any specific aspect whatsoever of this plan. Nor do you set out a value proposition for shareholders, or address how your idea would provide clarity or stability for HBOS and its shareholders and customers."

The reply from HBOS chairman Dennis Stevenson ends: "Accordingly, the Board has unanimously concluded that your letter does not form the basis for any further discussion between us."

The Lloyds TSB takeover of HBOS was proposed last month as the banking giant struggled to cope in the current financial climate. And, although the terms have been renegotiated, the deal is still very much on track according to HBOS.

It is thought that the opposition to the deal from ex Royal Bank of Scotland chief Sir George Mathewson and former Bank of Scotland chief executive Sir Peter Burt, is down to the banks participation in the Government bail out whereby HBOS and Lloyds TSB combined will raise £13billion in new capital along with preference shares sold to the Government.

According to reports, Burt and Mathewson believe that once HBOS has raised capital through the scheme, the takeover will no longer be required as the banking group will have successfully shored up its balance sheet.

However, HBOS continues to believe that the takeover is necessary, and, according to reports today, so too does Gordon Brown who has chosen to waiver competition rules to allow the deal to go ahead.

© Fair Investment Company Ltd