HBOS rival deal ditched

Friday 21st November 2008

A proposed rival bid for Halifax Bank of Scotland (HBOS) has been dropped.

Sir Peter Burt and Sir George Mathewson had spoken about raising backing for a rival bid to Lloyds TSB to take over HBOS and keep the firm independent.

However, following a statement by Alistair Darling the former head of the Bank of Scotland and the former head of Royal Bank of Scotland dropped their plans.

But they did deliver a parting shot the HBOS board and the government for allowing a deal that will create job losses and less competition, and backhandedly said Lloyds TSB had made "the deal of the century".

Originally the pair had claimed the Lloyds TSB offer was no longer in the interest of shareholders due to the government's bailout of the banking sector.

However, today they put out a joint statement saying: "The government’s statement has raised several hurdles very high and has made it crystal clear that they do not want and are not prepared to facilitate HBOS remaining independent.

"Accordingly Sir Peter and Sir George reluctantly decided to discontinue their campaign."

While welcoming the government's bank recapitalisation plan – which will see it buy into RBS and the merged HBOS/Lloyds TSB Group, they retained their stance the HBOS board failed "to explore the alternatives available to HBOS adequately" and failed to get a good deal for shareholders.

They also claimed they had managed to raise £500 million from backers which could have kept HBOS independent.

"Ironically the HBOS’ spokesman’s criticism that our proposal offered no additional money overlooked that fact that Lloyds themselves are providing no money at all and indeed will be in receipt of assistance at a level which is a relatively higher percentage of their capital base than the £11.5 billion is of HBOS’ capital.

"However the rules have now been firmly established and Sir Peter and Sir George regret that an opportunity to keep HBOS independent, albeit with the government as the (temporary) major shareholder, has been lost along with thousands of jobs, unnecessarily as the UK economy struggles with recession.

"The anticompetitive nature of this takeover will be borne by the community at large."

They added: "Nevertheless we think that Lloyds seized a great opportunity and our congratulations go to Sir Victor Blank and his colleagues for having done so.

"It may well be ‘the deal of the century!’"

HBOS shareholders are to vote on the deal to merge with Lloyds TSB next month.

Lloyds TSB shareholders have already accepted the deal at a meeting this week.

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