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Lloyds TSB and HBOS deal

(14 Posts)
Upwind Thu 18-Sep-08 17:08:41

From: the Guardian

"Lloyds TSB has given the government a pledge that it will keep lending to first-time buyers, in return for assurances that its £12bn bid for HBOS, announced today, would escape the scrutiny of the competition authorities.

Sir Victor Blank, the chairman of Lloyds TSB, revealed that he struck the deal with Gordon Brown at a City drinks party on Monday. The prime minister promised that the deal would not be investigated if the enlarged bank continued to provide funds to would-be homeowners. HBOS owns the Halifax and is Britain's biggest mortgage lender.

So, they have created a massive monopoly in return for short term effects on the housing market aimed at keeping prices unaffordable shock

And how much of taxpayers money was used to sweeten this deal? Alastair Darling avoided that question on the radio this morning. Our money must have been involved or I don't see why Lloyds TSB would pay so much over the odds for HBOS.

palaver Thu 18-Sep-08 17:12:08

I thought Lloyds got a bargain - the HBOS share price is about a 5th of what it was last yr

palaver Thu 18-Sep-08 17:13:58

oh it's a quarter not a fifth

Lloyds will offer 0.83 of its shares for each HBOS share, valuing them at 232 pence based on Wednesday's closing prices, or a 58 percent premium. The deal values HBOS at 12.2 billion pound ($21.7 billion), only a quarter of its value a year ago.

Lizzylou Thu 18-Sep-08 17:14:11

First thing I wondered about was monopoly rules when I heard about this, well after worrying about my Mom.
My Mom works for HBOS and is very worried about her job, she is 56yrs old, only has a small mortgage but was banking on working for at least 5 years more as she is now on her own.

Upwind Thu 18-Sep-08 17:16:01

palaver, indeed but that is not what its "value" was yesterday morning when the merger was announced!

The market price of the shares of any company are supposed to reflect all the information available at the time. More was known yesterday about HBOS' prospects than was known last year.

Mutt Thu 18-Sep-08 17:17:27

Message withdrawn at poster's request.

Upwind Thu 18-Sep-08 17:17:42

I hope your Mom is okay Lizzylou - I guess that at least this deal means she would get a redundancy payment if her job does go...

Lizzylou Thu 18-Sep-08 19:31:46

Thanks, she actually retired (early) then split up with my stepdad and went back 2.5yrs ago, so she won't get very much sad
She has a nice house in a very nice area, and she has a very small pension coming in, but has more coming when she is 62yrs old.
She is fab at her job and has always been paid peanuts by Halifax, then HBOS, now Lloyds. They were warned that the bank had made some bad decisions and were heavily into the subprime market, which is ironic as Halifax have always been very strict in the UK.
The Head at HBOS hasn't got a banking background, he used to be head of Asda. I think hiring him may have been a mistake.

TwoIfBySea Thu 18-Sep-08 20:28:15

This wasn't so much a deal as a steal and I can't believe the government allowed the speculators to bring down a 300 year old bank that had nothing wrong with it.

Time for some serious regulation - so far this year the speculators have run up prices in food, oil and now this.

fiodyl Fri 19-Sep-08 10:33:14

Sorry TwoIfBySea but that is a load of crap.

There was plenty wrong with a bank that lent out more than double the money it actually had, allowed people to lie to borrow money from them and then wrapped the toxic debt up in tinsel, sold it on and made huge profits.

They made billions by speculation on the way up, yet failed to put anything by for when the times were not so good. hardly a great business model if you ask me.

The government are point the finger at the short sellers and hedge funds to hide the fact that they have been complicit in this all along.

They have privatised the profits and socialised the losses. They have had one hell of a party for the last 11 years and now we will all have to pick up the bill for it.

If you have a pension don't expect it to be worth much now, especially if you are retiring in the next couple of years.

TwoIfBySea Fri 19-Sep-08 18:08:48

Gee don't mince words there fiodyl.

Don't mind that I get angry because I see the bank where I have my meagre savings, plus my dts savings under threat like that. Fair gives the heart a thump when you see it on the news.

Anyone think the Royal Bank of Scotland is safer? I am beginning to think my gran had the right idea when she hid £12k in the pages of books tucked into a suitcase under the bed.

Conspiracy has it that this was done to scupper any independence plans by getting rid of one of our main banks. I see fiodyl knows different though. Still us left paying for it as always. Do you think the HBoS boss will share out his £2million shares he got as a sweetner with the staff who get the sack?

lovecat Sat 20-Sep-08 00:59:43

RBS's domestic and corporate banking business is fundamentally sound <crosses fingers hastily> - they aren't anywhere near as heavily into the mortgage business as HBOS were, however, their Capital Markets division has suffered a big hit with the sub-prime crisis and that part of the business is not doing well at all atm. There's also the fact that they paid silly money for ABN Ambro who are far more of an investment bank than a 'banking' bank and thus more exposed to this type of risk.

Although a loss was made this half year, if you were to take the markets business out of the frame most other units of the bank increased their profitability.

However, given that everyone's running round like headless chickens atm and certain parts of the media and the markets appear to be hunting their next big scalp, who can be sure of anything, regardless of the facts?

avenanap Sat 20-Sep-08 01:07:37

Ok. What I don't get is, if all of this was caused by the sub prime market in America, what happens to the houses that were bought using these loans, they have all been repossessed right? So they will all be on the market again to be sold again. So, when they are sold the banks will get all their money back won't they? So will they be making a hell of a lot of money out of us yet again and will Lloyds TSB not have problems as it will have most of the UK banking industry?

fiodyl Sat 20-Sep-08 12:32:59

they cant sell th reposessed house for the amount that was borrowed against them. No one is willing to pay the overinflated prices of previous years for them, and banks are not willing to lend those amounts for them anymore either. In some parts of the US there are whole areas full of 'open houses' standing empty and in the worst areas this have been stripped of anything of value(pipes, electrics etc) in an attempt to get something back against the bad debt.

Its not just limited to the US either, i say a repossession go for £122k last week at auction that was bought just last year for £185k. We may be lagging the US but there is nothing to suggest it won't get as bad here in fact it may be worse as a higher % of our economy is built on the housing and banking sectors.

IMO we will see the full extent of the fallout by early spring next year.

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