Lloyds TSB reveals HBOS takeover

It has been one headline after another for the Financial Services sector this week, as Lloyds TSB announces a £12 billion takeover deal for troubled rival HBOS.

 

The deal has government backing, overriding any concerns that it may reduce competition in the banking industry. Fears for HBOS have been growing over the past few days as its share prices plummeted and it is thought the government approved the takeover in order to avoid the prospective of another Northern Rock crisis.

 

It is a great opportunity for Lloyds, says Gavin Bonnet, Managing Director UK, Akamai Financial Markets. “It’s a transaction that obviously couldn’t have happened previously in a different economic climate because of the implications for the monopolies and mergers commissions,” he comments. “But it has been allowed to go ahead now because of the distressed nature of the bank involved.”

 

However, the speed at which banks are now being acquired makes it difficult to judge just what the effects will be. “There’s so much uncertainty and the pace at which these transactions are conducted prevents anyone from really understanding where the potential risks lie in making such hasty decisions,” remarks Bonnet.