Lloyd's tsb create a monster
A £12 billion deal between Lloyds TSB and HBOS has created a banking giant holding close to one-third of the UK's savings and mortgage market.
Halifax Bank of Scotland, (HBOS) currently the country's largest mortgage lender with 20 per cent of the market, has been taken over by Lloyds TSB, which ranks fourth with an 8 per cent share.
While almost all banks have been targeted by worried shareholders since Lehman Brothers, the US investment bank, filed for bankruptcy on Monday, HBOS has been hit much harder than any others in Britain, with shares falling by as much as 68.7 per cent.
Yesterday, September 16th, HBOS shares fluctuated wildly on the London market, climbing as high as 220 pence and falling as low as 88 pence.
The takeover, which will create a giant firm with 22 million customers, would not usually be allowed, and would be blocked by competition watchdogs.
However, in this case, due to the economic situation, the Government has supported such a deal because any failure of HBOS would have such a damaging impact on the UK.
Some industry experts feel that the huge deal would mean less competition and therefore reduced choice for consumers.
Any merger could lead to as many as 40,000 job cuts and the closure of at least 1,000 branches.
In other banking news - Morgan Stanley may be the next US
investment bank to fall victim to the credit crunch.
HSBC and China's CITIC Group have
both been named as potential buyers for the bank, following drops of 24 per
cent in Morgan Stanley's share
price yesterday, September 16th.
Morgan Stanley bought Bear Stearns in March.