Thursday, Sep 18, 2008

LONDON, Sept 18 (KUNA) -- Lloyds TSB bank unveiled details Thursday of its 12.2 billion pounds takeover of ailing rival Halifax Bank of Scotland (HBOS).

The deal, which is subject to shareholder agreement as well as ratification from the UK Financial Services Authority, will create a new banking giant with around a third of the mortgage and savings markets.

HBOS chairman Dennis Stevenson said, "This is the right transaction for HBOS and its shareholders."

Analysts have estimated that as many as 40,000 jobs could be lost from the banks' combined 145,000 staff.

HBOS has 75,000 staff and the remainder work at Lloyds TSB.

The deal agreement said, "Significant cost savings can be made by combining the networks and back offices of Lloyds TSB and HBOS."

It added that the takeover would result in "cost synergies" of one billion pounds by 2011, or around 10 percent of the combined cost base.

There will be "elimination of branch duplication" in the retail arm.

HBOS has 1,100 branches, and Lloyds TSB 1,900 in the UK.

There will also be "consolidation of head office functions," including human resources, finance and legal departments.

The deal comes after a run on HBOS shares this week which has seen the group's share price fall as much as 70 percent.

It is expected the British government will waive competition rules to get the transaction through, and reportedly follows talks between Lloyds TSB chairman Sir Victor Blank and Prime Minister Gordon Brown.

Britain's Business Secretary John Hutton confirmed the Government will push through the merger on public interest grounds to "ensure the stability of the UK financial system."

An order allowing this will be laid before Parliament when the House of Commons returns after the summer recess.

Currently public interest grounds cover only plurality of media ownership and national security.

Hutton's decision follows advice from the UK tripartite authorities, the Treasury, Bank of England (Britains Central Bank) and the Financial Services Authority.

Lloyds TSB will offer 0.83 of its shares for each HBOS share, valuing them at 232 pence each.

Sir Victor Blank will be chairman of the enlarged group under the deal, and Lloyds TSB chief executive Eric Daniels will continue in that role.

There was no word on the future role of HBOS chief executive Andy Hornby.

Commenting on the takeover agreement, Sir Victor said, "This will be a unique opportunity to accelerate and extend our strategy and create the UK's leading financial services group." (end)

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(END) Dow Jones Newswires

18-09-08 0858GMT