HBOS confirms merger talks
HALIFAX Bank of Scotland (HBOS), the UK’s biggest mortgage lender, has confirmed it is in “advanced£ merger talks with Lloyds TSB this morning as the US Federal Reserve announced a £48bn rescue package for insurer AIG.
HBOS said in a statement: “In the light of market speculation, the Board of HBOS plc confirms that it is in advanced talks with Lloyds TSB Group plc which may or may not lead to an offer being made for HBOS.”
It is hoped by traders and analysts that the move to stave off bankruptcy at AIG will help markets to stabilise.
The FTSE 100 Index opened 54.1 points up at 5079.7 – a gain of 1%.
It was also reported this morning that Lloyds TSB was in advanced merger talks with HBOS to create a giant UK super retail bank.
HBOS’s shares lost as much as 40% of their value at one point yesterday and closed the day down 21.7% at 182p, a fall of 50.5p.
However they initially rallied this morning and opened 5.4p up at 187.4p, and had risen further to 197.5p by 8.30am.
But they then slipped down 44.5p to 137.5p.
HBOS put out a statement yesterday saying it was funding satisfactorily and had a strong capital base.
AIG will get an $85bn loan, in return for an 80% public stake in the firm.
Meanwhile, Barclays Bank today agreed to acquire the North American investment banking and capital markets operations of Lehman Brothers, which filed for bankruptcy protection on Monday.
The $250m deal, which is subject to approval from the bankruptcy court, will make the British bank the third biggest investment bank in the US.
Barclays will also purchase Lehman’s New York headquarters and its two data centres in New Jersey for $1.5bn.
