HBOS targeted for takeover

Friday 25th July 2008

US investment bank JP Morgan is in talks over plans to break up Halifax Bank of Scotland (HBOS).

The Telegraph reports a number of large international banking players and private equity firms have been approached over a deal for the UK's largest mortgage lender.

Plans would mirror the break-up of ABN Amro last year, with different players taking on HBOS's different international interests – with the Telegraph naming interested parties as possibly being National Australia Bank (NAB) and Abbey-owner Santander.

Insight, HBOS's investment management division, and its insurance business Clerical Medical could be sold off or picked up by a buyer, along with its UK high street banks.

HBOS has become a takeover target following the sharp decline in its share price over the last year and the recent poor showing from investors on its rights issue.

In the last 12 months, the HBOS share price has fallen 71 per cent – from just under £10 a share to a recent low of 286.25p.

A spokesperson for HBOS refused to comment on the deal, but said: "There has been a lot of speculation in the banking market of late."

Doubts have been raised over the reports after Santander's recent deal to buy Alliance & Leicester make it less likely to be making a further bid.

Also NAB – owner of Yorkshire and Clydesdale banks in the UK – also today announced it was setting aside AU$830 million (£400 million) to cover losses from the US mortgage market.

Last week a takeover bid from Spanish rival BBVA was mooted.

This morning the HBOS share price fell 3.15 per cent to 292p at 9:08 BST.

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