LloydsTsb/HBOS Merger?

Robinmsa

I am a Lloydstsb shareholder and currently Lloydstsb shares are 173.50pence and hbos are slowly dropping further 78.90 LSE closing price today. I've forwarded my points to Mr Daniels at an E-mail just to see what he has to say, LoL.

So do you think that the price will get renogotiated, to less than 50% (wouldn't surprise me) or Lloyds just Scrap the deal?

Let HBOS go buy the best bits.

sabretoothtigger

They arent led by market price, the assets of the bank far exceed their market capital for both of them

baby_boomer

Telegraph - Mandelson starts to bully shareholders - No merger, no £17bn

He says the recapitalisation of both banks by the government is conditional on the merger going ahead.

Alex Salmond is wanting HBOS to remain independendent. To this Mandelson replied.

"..when asked whether HBOS could survive alone with the promised £11.5bn of capital, Lord Mandelson said: "I don't think that's likely to be attractive either to HBOS or the Government...."

So why should it be attractive to Lloyds shareholders?

Is Mandelson saying that he won't rescue HBOS should Lloyds decline the poisoned chalice?

Independent - The terms of Gordon's capital plan are oppressive compared to all other countries - It's a myth that his plan is a model for the rest of the world

"..In all other countries, the amounts of new capital being forced on banks have been smaller, on much more generous terms and far less dilutive of existing shareholders. The recapitalisation announced of leading French banks this week doesn't involve equity or quasi-equity at all, but is in the form of subordinated loans payable after other debts are met. The preference share capital that American banks are being obliged to take from the taxpayer carries a coupon of just 5 per cent, against the almost usurious 12 per cent the UK Government is charging. In Switzerland, similar care has been taken not to interfere with property rights. New capital is being provided in a way that avoids wholesale dilution. Similarly in Germany, the terms of the preference stock were pared down, after complaints, to US levels...."

ad44downey

Good. Lloyds doesn't need the money anyway, it's a well run bank. Drop hbos and let it go down the swanee where it belongs.

baby_boomer

The Times business comment today suggests that large shareholders with holdings in both banks are in favour, but those with just Lloyds shares still need persuading.

Lloyds market capitalisation at the moment is more than £10bn - but to raise £5.5bn in the market, would not be an easy task unless the big institutions pledged to support such a rights issue, with its implicit dangers to the share price.

DocProc

I would like to see, in 'Table' format, a list of the benefits and disadvantages of the merger.

One big benefit to Lloyds TSB, that I can clearly see is, that suitably financed with a loan from the government, they are able to acquire HBOS and capture an enormous share of the market place. So much so that it make them so strong, it must bust the more traditional type of competition laws.

One benefit to the HBOS group might be, that without this merger it could have gone bust. This might have meant full nationalisation of the HBOS group.

Some might say, "Well that's what has happened to RBS and they aren't complaining because otherwise, they would have gone bust."

On the negative side, the share price of Lloyds TSB has gone down by 50% or so in about a couple of weeks. Additionally, it's fantastic dividend payout record has been scrapped. This makes an investment in it not really worthwhile , say for a period of about five years or so, or at least until it has paid back the government bailout loan. The board have clearly not acted in the best interests of their shareholders in creating a situation like this.

And there's more.....

What exactly are the problems with HBOS? Just why does it need the merger? What might be the benefits? What are the disadvantages?

Will the merger pull Lloyds TSB down? What are the advantages to Lloyds TSB of going ahead?

Is it just that the board of Lloyds TSB is after one hell of a mammoth pay rise, for taking on double the existing levels of responsibility?

Yes. I would like to see all the pluses and minuses set out in table form.

sabretoothtigger

Office of Fair Trading
17 October 2008

Anticipated acquisition by Lloyds TSB plc of HBOS plc - public interest consideration



On 25 September 2008, the Office of Fair Trading issued an invitation to comment on the public interest consideration specified in the Secretary of State's Intervention Notice, 'the stability of the UK financial system', in the anticipated acquisition by Lloyds TSB plc of HBOS plc. In light of the rapidly changing conditions in the financial markets, and in consultation with the Secretary of State, the OFT has extended its deadline for receiving representations on the public interest consideration until Thursday 23 October 2008.



The Office of Fair Trading is required to complete its competition investigation and make its report to the Secretary of State in accordance with section 44 of the Enterprise Act 2002 within the period ending on 24 October 2008. As part of its report, the Office of Fair Trading is required to summarise any representations it receives which relate to the public interest consideration.



Affected sector: financial services



Date for any representations about the specified public interest consideration to be received by the OFT:
23 October 2008



Case officer name: Luc!lia Falsarella Pereira



Tel no: 020 7211 8252



E-mail: [EMAIL="hbos.mergerinquiry@oft.gsi.gov.uk"]hbos.mergerinquiry@oft.gsi.gov.uk[/EMAIL]

"Dear Ms Pereira I understand you are handling this case and felt strongly that I should write to you as a relatively small shareholder.

My husband worked for Lloyds TSB for approximately 10 years. During that time he took all his annual bonuses in shares. When he left the bank, we kept the shares and since that time have always received our dividends in the form of shares. This, we felt, would be a good investment for our retirement.

We now feel we are being sold down the river by a board who feel it is appropriate to "do deals" over drinks. As recently as 3 months ago we were being assured that LloydsTSB were in great financial shape, having very little exposure to the US sub-prime debacle that is affecting so many financial institutions. We were assured that no bail out would be necessary.

A few drinks with the PM and what a difference! The proposed merger with HBOS is very definitely not in the interest of shareholders and the government bail-out will serve to deprive shareholders of dividends (as well as having a disastrous effect on the value of our holdings).

Conversely, it is clear that the merger will have huge benefits as far as the board members of LloydsTSB are concerned. These will be financial and doubtless political as they become Labour peers one by one.

Contrary to popular media reporting, the vast majority of LloydsTSB shareholders are not "fat cats" - they are people like us who have saved and worked hard to prepare for retirement. We hold approximately 10,500 ordinary shares which, earlier this year, were worth in the region of £60,000. Not a great deal to someone like Eric Daniels or Gordon Brown, but a useful investment for us. The value is now approximately £17,500 - even to us that is not a great deal.

We were initially quite excited about the acquisition of HBOS, having been reassured of the great shape LloydsTSB was in. Then the other shoe dropped, as it does so often when this government become involved. The trade off (and there always is one) was that the government were allowed to sink their noses into the trough previously reserved for Mr Daniels and his ilk. The government will be receiving a huge 12% per annum on their preference shares whilst we are deprived of any dividend for 5 years and consequently end up with an investment that is completely worthless.

When the extra ordinary shares are issued our investment will probably be more or less wiped out. We will not be voting for this merger or for the forced government funding.

We will also be voting to dismiss the board of directors if anyone is allowed to table such a motion. We believe LloydsTSB would be better served by directors who do business in the boardroom rather than the bar."

Its got to be said keeping all shares, all in one company as a form of pension is a terrible idea now or any time. I hope they can wait another 10 years

baby_boomer

HBOS shares are trading at a 40 per cent discount to the value of the Lloyds offer.

The market is still not sure that this deal is going through on the current, revised, terms.

But then again, Lloyds shares are trading at a discount to the price at which the government has agreed to underwrite its capital injection [fair enough given that horrendous 12% guaranteed dividend].

Times - Kaletsky

Times - Doubts over deal as HBOS share price continues to slide

halight

Hi,

I think long tearm 5 years + the coming together of the two bank would be good.

However over the short tearm i think it will be bad for staff, custermors and share owners.
I own shares in both banks. and at the moment im buying into both. But only on a small scale. As the months and yaers pass i will buy into both a bit more. I hope that it gos ahead and i think in a few years time the shares at todays price in both will look very chaeep .

aqueoushumour01

If the two banks do merge does anyone know whether HBOS will still be run as a separate brand (with shares trading separately to those of lloyds tsb) or will HBOS shareholders receive x amount of lloyds tsb shares with the HBOS shares disappearing altogether?