Prime minister will offer oversight as HBOS enter final talks in Lloyds TSB takeover.
A proposed 35 billion pound merger between the two banks, which has the green light from UK authorities will be negotiated by the Prime Minister himself, the BBC has been informed. It will put an end to speculation over the Halifax-Bank of Scotland position after their recent share run.
Although the two
sides have yet to comment on the agreement, the developing deal is expected to
calm nerves in the industry after the credit crunch last week and further
gloomy news regarding employment figures.
Banking crisis
The global economy
has been in chaos and one of America’s largest investment banks, Lehman Brothers, filing for bankruptcy protection has not
helped matters. Barclays Bank is expected to purchase major assets from the
U.S. firm soon.
Following rumours
of turmoil at AIG, the
U.S. treasury rescued the group with a huge $85 billion bailout, and Merrill
Lynch was forced to sell up in a $60 billion deal with Bank of America.
Meanwhile,
in Russia, significant stock declines meant trading had to be stopped this
week.
Tony Harris, Senior Vice President of Equity Trading at Softbank CIBC International commented on the bank merger in an email to clients, “The merger will come as very welcome news to the government and regulatory watchdogs. The recent run on HBOS shares sparked some panic into the company’s financiers. It would turn into a full scale crisis if they withdrew credit.”
He added,
“The fact that PM Gordon Brown is getting intimately involved himself is an
indicator of the seriousness of the situation.”
Watchdogs
Dispelling
any concerns that competition regulators would interfere in the merger, the
government announced that it would “override Office of Fair Trading and
Competition Commission powers to see thetie-up to completion”.
