Lloyds/HBOS merger could be scrapped

| August 9, 2010 | 0 Comments

According to the Daily Mail, the controversial takeover of HBOS by Lloyds could be scrapped if a Government investigation establishes it has damaged competition.

The hasty takeover, which took place at the height of the financial crisis, created a banking giant but has been heavily criticised and has resulted in thousands of job losses because of the level of overlap between the two banks.

The takeover, which was subject to much criticism, left Lloyds Banking Group 43% state-owned.

Meanwhile, according to Business Secretary, Vince Cable, the new coalition Government could unravel the merger.

It comes at a time when the Independent Commission on Banking is to investigate whether Britain’s big banks should be broken up.

In the meantime, the merger also angered investors who claimed they were lured into voting for the takeover.

An investor group called Lloyds Action Now, which comprises around 500 shareholders, has issued demands for compensation on behalf of test claimants to the Treasury, Sir Victor Blank (former chairman of Lloyds), and Eric Daniels, the bank’s chief executive.

The Lloyds group of shareholders claim they were misled into voting for the takeover without being informed that loans to HBOS from the Bank of England totalled approximately £25.4 billion.

The loans from the Bank of England to HBOS were made in October 2008 – soon after the demise of US investment bank Lehman Brothers.

While the loans have now been repaid, they were not disclosed in the takeover documents.

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