Lloyds TSB/HBOS merger gets green light
The new Lloyds Banking Group, formed by the merger of Lloyds TSB and HBOS, has received legal approval by a court in Edinburgh and will commence trading next week.
The news comes just one day after it was announced that the new banking giant will be 43.4% owned by the taxpayer, after investors bought just 0.5% of shares on offer from Lloyds TSB and 0.24% of stock on offer from HBOS.
Lloyds TSB chief executive, Eric Daniels, said the newly-formed banking giant will have a strong financial position, and will control around one quarter of British customers’ personal bank accounts and approximately 28% of the mortgage market.
Lloyds Banking Group will comprise almost 150,000 staff and 3,000 branches, the sheer size of the new banking giant would usually spark competition concerns, however, these were waived by the Government, arguing that the deal would bring ‘stability‘ to the banking sector.
The proposed merger has met with many hurdles since it was announced last September.
At the end of last month, HBOS pension fund trustees were threatening to block the proposed merger demanding better protection to be put in place for the scheme’s 80,000 members.
Furthermore, at the end of November, a group of businessmen launched a legal challenge against the proposed merger, claiming the Government’s approval was illegal.
The Merger Action Group (MAG), which was led by Malcolm Fraser, claimed that business secretary, Lord Mandelson, waived competition rules and that his decision was ‘unlawful‘.
The two banks join RBS, who was also bailed out by the taxpayer in November, due to the small take-up of its £15 billion share offer by investors, the Government now owns 57.9% of the bank.