INSTANT VIEW: Lloyds seals deal for HBOS

LONDON (Reuters) -Lloyds TSB has sealed a 12.2 billion pound deal to buy HBOS, to create a dominant UK mortgage and savings provider.

The following are reactions from market participants and industry groups.

GOLDMAN SACHS ANALYSTS

"While the acquisition is undoubtedly financially attractive both in terms of accretion and significantly increasing the dividend cover (1.1x to 1.6x in 2010E), strategically there are questions.

"However, considering the premium for liquidity that has arisen since last weekend, this is likely to be overlooked. We believe that combining the two carries significant execution risk due to their similarity which in the short term mitigates significant potential upside.

"Key risks are integrating the two businesses successfully, adverse fair value impacts and impairments from the deteriorating UK economy."

SCOT RANKIN, ANALYST, DAVY RESEARCH

"The HBOS deal is significantly earnings enhancing for Lloyds (over 20 percent three years out), taking into account cost savings, but the combined entity is more HBOS than Lloyds when it comes to the balance sheet (two thirds).

"The core equity ratio of the new entity on a pro-forma basis was 5.9 percent as of last June ... While this looks reasonable the market may be concerned that this doesn't give the new company a lot of cover for surprises,