Troubled mortgage giant HBOS has become the subject of speculation that it could merge with rival Lloyds TSB.
Earlier, shares in the group plunged for a third day in a row amid funding fears, diving as much as 50%, but recovered to 7% down after the report from the BBC. The broadcaster said HBOS and Lloyds TSB were in “advanced” talks over a combination.
Asked about the discussions, an HBOS spokesman declined to comment.
HBOS is the UK’s biggest mortgage lender and savings bank. It already has £258 billion of retail deposits, and around 15 million savers.
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Lloyds TSB, which does the bulk of its mortgage lending under its Cheltenham & Gloucester brand, is the UK’s third biggest lender in terms of outstanding home loans. During 2007, the latest year for which figures are available, it wrote 8% of all mortgages in the UK.
The merger news fuelled a rollercoaster session for London’s leading share index, which opened up, then quickly slumped to a 40 month-low before recovering back into the black.
HBOS topped the fallers board at the start of trading, then led the casualty list as its share price plunged.
The group sought to reassure investors over its funding, but it failed to prevent its shares slumping for the third day in a row. The bank’s stock fell almost 40% at one point on Tuesday before closing 22% lower. Analysts have said HBOS needs to refinance more than £100 billion of funding during the coming months, which could be more challenging after the blow to confidence from Lehman’s demise.
September 18th, 2008 at 2:11 am
so halifax and lloyds to merge,why?people invest their money, pay their mortgages with interest added.halifax and bank of scotland must be amongst the richest businesses in the country.it seems speculation and panic amongst people with influence was enough to wipe 70% of the value out of hbos.i wish i had a grasp of how this works,surely they have an inventory of assets and they are worth what its contenents are,period.now they are merging with lloyds its seems out of desperation and this can only be bad for us the little people once again.we have had utility prices rocket bringing down our disposable income considerably and now we will have “the bank” (32m customers)price fixing on the high street to extract more of our pennies with some sort of cartel and no competition.if we the common people can take care of our finances and be frugal when need be why cannot people with expertise in finance be prudent.if they collapse the banking system and steal the populations life savings i think the meek and humble british will take out some mussolini type of punishment upon these corporate leeches,be warned.