PM positive over Lloyds HBOS deal

Gordon Brown says he is confident the deal by Lloyds TSB to buy HBOS will go ahead

Wednesday, 01, Oct 2008 12:00

Gordon Brown has said he is confident the deal by Lloyds TSB to buy Halifax Bank of Scotland (HBOS) will go ahead.

Speaking to Sky News, Mr Brown said that he had spoken to both parties and was unconcerned over suggestions that Lloyds would try and renegotiate the deal as HBOS shares fell almost 14 per cent on Tuesday.

The prime minister said the take-over deal was a "matter for shareholders not a matter for government" and claimed he had already changed competition laws possible.

Yesterday, Lloyds also denied the market rumours the deal was in danger.

The deal originally valued HBOS at 187p a share – although the HBOS shareholders would only receive 0.843 Lloyds TSB shares for each HBOS share.

However, the current share price is 122.4p – as the banking sector takes a hit over delays to the US $700 billion financial bail out deal.

A Lloyds TSB spokesperson said: "We are going ahead with the deal. Joining with HBOS remains a fantastic opportunity."

He explained teams at Lloyds TSB were already working behind the scenes on the structural side of the merger and were doing so from day one and hit out at unhelpful media reports.

On Monday, JP Morgan Cazenove called on Lloyds TSB to put a rights issue in place ahead of the merger to strengthen its balance sheet.

Analysts drew parallels between Lloyds TSB and Fortis – which has fallen back on state cash injections from the governments of Belgium, Luxembourg and the Netherlands in exchange for a 49 per cent stake after the European bank overextended itself with the takeover of ABN Amro.