Insights from the UK and beyond
The “shotgun wedding” of Lloyds and HBOS
“If you think you want to advance on this, we will deal with the competition issues” — so said Gordon Brown to Lloyds Chairman Sir Victor Blank last September, sweeping away the one big problem to a merger between Lloyds and HBOS.
At the time, Brown said the government had acted quickly and decisively in removing competition concerns and prodding the merger forward, despite concerns about the risk that Lloyds was taking.
Now the full scale of HBOS’ losses — 10 billion pounds in 2008 – has become known and the share price of the merged bank has taken a dive. Fears are growing that increasing fears that the government will have to pour in more money on top of the 17 billion pounds it has already spent to acquire 43 percent stake — or even nationalise it altogether.
Opposition parties have been quick to claim that Brown pushed through the “shotgun wedding” of a healthy, prudent Lloyds with the toxic HBOS to avoid the embarrassment of having to nationalise the Edinburgh bank.
But several analysts have noted that the two banks had long been talking to each other about a merger and that all Brown did was facilitate it.
How much blame do you think rests with the government in the Lloyds affair?