HBOS Takeover Puts Edinburgh Jobs In Focus
The announcement of Lloyds TSB's £12.2bn takeover of HBOS yesterday will probably mean tens of thousands of job cuts as the two banks are consolidated into one. While HBOS staff were reeling over the suddenness of yesterday's extraordinary deal, there were encouraging words for the 17,000 Scottish members of HBOS's 72,000 strong workforce. There are 7,000 Lloyds TSB workers in Scotland. In outlining details of the acquisition today, Lloyds TSB promised "the management focus is to keep jobs in Scotland."
HBOS, a company registered in Scotland, has its head office in the former Bank of Scotland building on The Mound in Edinburgh, opened in 1806 (pictured). HBOS-LloydsTSB's portfolio of brands includes the Bank of Scotland, Halifax, C&G and Scottish Widows.
Lloyds TSB said that the enlarged group will continue to use The Mound as its Scottish headquarters, will hold its Annual General Meeting in Scotland and will also continue to print Bank of Scotland bank notes.
HBOS, the biggest mortgage lender in the UK with 20% of the market, had been hit hard by the credit crunch with its share price falling like a rock. Under the terms of the deal, HBOS is valued at 232p a share. Shares were 837.63p each a year ago.
The new super-bank will hold a third of the mortgage market in the UK and should find greater financial stability.
“Against the backdrop of the very high levels of volatility our industry is experiencing, the combined group will be one of the strongest players in the UK financial services sector," said Dennis Stevenson, Chairman of HBOS. "We are recommending our shareholders vote for this transaction.”
The merger, following final approval by a majority vote by shareholders, should be completed by the end of 2008 or early 2009.
Here's an mp3 of Alex Salmond's response to MSPs today in which he calls for action against short sellers:
"We have to ask did this necessarily have to happen? Was it inevitable that a 300 year old institution in Scotland, and all it means to the Scottish economy, should be laid low in the manner it is. I do not believe it had to happen. I believe it is a soundly based institution. Only yesterday the Financial Services Authority described it in these terms.
"It was laid low by the actions of speculators in the money markets and action must be taken against them. (Applause) Other financial institutions will be targeted unless restraints are made to short selling. Short selling is when people enter into selling shares they have absolutely no title to whatsoever, and do it with the aim of making a speculative profit over other people's misery.
"I understand Russia has outlawed it, and that America has suspended it. I would urge our financial authorities to follow suit."
"I think that some of the headlines that we have seen today have been exaggerated. Many of the jobs that we have in the financial sector in these two insitutions in Scotland are extremely soundly based. They are based on retail banks. They are based on highly profitable areas of the financial sector. For example, Scottish Widows which is a subtantial part of the Lloyds TSB operation."
"But we have 7,000 employees in Lloyds TSB. We have 17,000 employees in HBOS in Scotland and understandably today there'll be concern for many of these employees in terms of their future employment prospects... This parliament, this government, will strain every sinew, will fight to the last iota to retain and protect as many as possible of these jobs and decision-making functions within the Scottish economy."
The plot thickens... The Financial Services Authority has restricted shortselling.
Hector Sants, chief executive of the FSA, said:
"While we still regard short-selling as a legitimate investment technique in normal market conditions, the current extreme circumstances have given rise to disorderly markets. As a result, we have taken this decisive action, after careful consideration, to protect the fundamental integrity and quality of markets and to guard against further instability in the financial sector."
The detailed changes to the Code of Market Conduct, and a schedule of the companies whose securities are covered by them, will be published before the market opens tomorrow (Friday 19 September)."