Lloyds TSB could face rival bid for HBOS

LONDON (Reuters) - Lloyds TSB, the bank which has agreed to take over HBOS, could face competition from the founder of HBOS's internet banking unit who is working on a rival bid, the Sunday Times newspaper reported.

The report said Jim Spowart, who founded HBOS's Intelligent Finance business, is working on a bid with a foreign bank whose identity is not known.

Spowart has yet to approach HBOS with an offer but has held preliminary talks with the Treasury and Jim Murphy, the Scottish Secretary, said the report, citing sources.

HBOS spokesman Shane O'Riordain told Reuters that the group "never comments on market speculation" and added that HBOS has "a recommended deal with Lloyds TSB, which brings certainty and tangible financial benefits to shareholders."

A Lloyds TSB spokesman told Reuters it remains "committed to the deal," adding that "on the terms we have agreed, we think it is a great deal for shareholders and for all the stakeholders around the table and we're pushing ahead."

Business Secretary Peter Mandelson on Friday gave the go-ahead to Lloyds TSB's takeover of HBOS, despite concerns about the merger's impact on competition.

Lloyds TSB is expected to publish its prospectus to buy HBOS and for a capital-raising on Monday, while the Royal Bank of Scotland is due to publish the prospectus for its 20 billion pounds capital-raising on Tuesday.

The Sunday Telegraph newspaper reported that HBOS will report that the declining value of Treasury assets will force it to write down an additional 5 billion pounds with RBS expected to unveil a hit of between 2 million and 5 million pounds, according to some analysts.

(Reporting by Rhys Jones; Editing by Jason Neely)