Legal challenge launched against Lloyds TSB / HBOS merger

A group of businessman have launched a legal challenge against the proposed Lloyds TSB / HBOS merger, claiming the Government’s approval was illegal.

The Merger Action Group (MAG), which is led by Malcolm Fraser, claimed that business secretary, Lord Mandelson, waived competition rules and that his decision was ‘unlawful‘.

Mr Fraser, an Edinburgh architect who was in charge of the repair and renewal of HBOS’ headquarters in the city, believes that the deal would result in the loss of a ‘vastly important national institution‘.

According to Shane O’Riordain, a spokesperson for HBOS, MAG’s legal challenge has ‘no merit whatsoever’.

A preliminary hearing of the group’s claims will be heard this week before a decision is made on whether it warrants a further discussion.

This is not the first time that the proposed merger has been challenged. A counterbid by Jim Spowart, a Scottish businessman and founder of Intelligent Finance, failed to materialise. Furthermore, former banking chiefs, Sir George Matthewson and Sir Peter Burt, attempted to block the merger.

Just under two weeks ago, Lloyds TSB shareholders voted on the proposed takeover of HBOS with 95.98% voting in favour of the deal.

HBOS investors are to vote on the deal on 12 December.

The merger will create a new banking giant called Lloyds Banking Group, which will comprise almost 150,000 staff and 3,000 branches.

However, analysts believe that up to 40,000 jobs could be lost as a result of the merger.

Discuss this in the Finance Markets forums

Story link: Legal challenge launched against Lloyds TSB / HBOS merger