Banking News HBOS Shares Drop As Losses Of £8billion Are Revealed 2642
HBOS shares drop as losses of £8billion are revealed
12 December 2008 / by Rebecca Sargent
The Interim Management Statement from HBOS highlights the dire straits that the banking group is in, and could help to secure shareholder votes in favour of the Lloyds TSB acquisition.
In fact the statement focussed on how the merger and Government help could save HBOS from inevitable failure, stating: “UK recession and increasing unemployment will continue to present a particularly challenging operating and credit environment.
“However, through the injection of capital and liquidity facilitated by the UK Government, both currently and going forward, HBOS remains confident in its ability to navigate through this difficult period, as it becomes part of the enlarged Lloyds Banking Group.”
The proposed merger between HBOS and Lloyds TSB has been given the go ahead by the Government after competition rules were ripped up in order to allow Lloyds TSB to rescue HBOS.
However, an appeal against this was made by the Merger Action Group, a group of customers, shareholders, employees and businessmen who think that HBOS could survive on its own.
Although the appeal was thrown out by the competition tribunal, the gloomy statement released by HBOS today should go towards convincing opponents to the merger that without it, HBOS would be in an exceptionally weak position.
Commenting on the merger Graham Spooner, investment advisor at The Share Centre, said: “We would be very shocked if the vote didn’t get the nod. As far as we are concerned HBOS shareholders have no choice but to approve the vote.”
Speaking of what this could mean for HBOS investors, Mr Spooner added: “If, as expected, the vote does get the nod, shareholders are likely to see little benefit in the short term, apart from a sense of relief that the bank isn’t going to fold.
“However, the new bank’s long term prospects appear brighter, as it should benefit from its prominence on the high street and greater market share.”
The results of the vote will be announced later today.
© Fair Investment Company Ltd