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Lloyds Banking Group to drop HBOS name and be free of government involvement in 2009

04 November 2008 / by Rachael Stiles
The names Lloyds TSB, Halifax, HBOS and Bank of Scotland will no longer be part of the corporate name after the merger between Lloyds TSB and HBOS, when they will become collectively known as Lloyds Banking Group.

The Bank of Scotland (BOS) and Halifax brands will still be used, however, in some form on the high street once the rebranding has taken place, said Eric Daniels, chief executive of Lloyds TSB.

"The Acquisition of HBOS represents a compelling opportunity to accelerate Lloyds TSB's strategy and create the UK's leading financial services group." said Lloyds chairman Victor Blank in a letter to shareholders.

Meanwhile, Lloyds has said announced that within a year it will be able to free itself of the Government interference it will face as part of its £17billion bail-out from taxpayer's money. The taxpayer will end up owning about 40 per cent of the merged Lloyds Banking Group.

Lloyds intends to raise the money to repay the Government by tapping private investors, selling off assets and other cash-saving means, raising fears that it intends to carry out dramatic job cuts as part of its cost cutting measures, rumours which the bank has refused to dispel.

It will get the cash injection as part of the Government's £37billion recapitalisation plan for the financial sector, but Mr Daniels has said that the new banking group will be able to repurchase the £4billion of preference shares from the Government next year, reclaiming its independence.

The bank will also ask shareholders to subscribe to a £4.5billion rights issue and offer a further £1billion of preference shares to the Government. Lloyds will have to repay the £1billion of preference shares before it can resume paying dividends to its ordinary shareholders.

Blank continued to say in the letter that "The Lloyds TSB Directors believe that the Enlarged Group will be more competitive and will have significantly greater opportunities to create sustainable shareholder value than Lloyds TSB would on a standalone basis in what is now a materially more challenging market environment."

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