November 19, 2008 / 2:11 PM / 9 years ago

Lloyds investors back HBOS deal

LONDON (Reuters) - Lloyds TSB investors overwhelmingly backed its takeover of HBOS and a government bailout plan on Wednesday, putting the banks on track to complete the deal in mid January.

More than 96 percent of shareholders supported votes on the takeover, the issue of new shares under the fundraising plans and six other resolutions.

“We believe this transaction provides certainty for the shareholders of HBOS and they, along with the Lloyds TSB shareholders, will have the opportunity to share in the benefits that come from the combination,” Eric Daniels, Lloyds CEO, said in a statement following the meeting in Glasgow.

Most of the resolutions only needed majority approval and approval of the deal had been widely expected.

At 4:53 p.m., Lloyds shares were down 9.7 percent at 118.44 pence, in line with another steep fall by European banks. HBOS shares were up 2.1 percent at 64.3p, clawing back recent losses but still below the 73.8p implied value of the Lloyds offer.


Lloyds also faced unions concerned about the potential for as many as 40,000 job cuts.

Daniels said no decisions had been made on the scale of job cuts, and he was reviewing offshoring and outsourcing policy.

Steve Tatlow, assistant general secretary of Lloyds TSB Group Union (LTU), which represents over 40,000 staff, urged the bank to provide a commitment to keep compulsory redundancies to a minimum and offer clarity on offshoring and severance pay policies.

“You don’t need all the finer details to make those sort of commitments,” he said by telephone after the meeting.

The merger could result in at least 20,000 job cuts and possibly 40,000 from a combined workforce of 145,000, analysts have estimated.

The deal is estimated to save 1.5 billion pounds a year by 2011.

Lloyds agreed to buy HBOS in September in a government brokered deal after HBOS’s share price was ravaged by concern about its health as the credit crisis deepened.

The banks are due to receive a combined 17 billion pounds under a government recapitalisation plan agreed last month.

Britain has warned that any renegotiation of that package would be far more costly for banks than the original terms, which prompted Peter Burt, the former chief executive of Bank of Scotland who has tried to scupper the Lloyds deal, to say a rival deal is highly unlikely.

“Although ostensibly leaving the decision to shareholders, the barriers to any alternative proposal are now so great as to make any such proposal effectively improbable,” he was quoted as saying in the Scotsman newspaper.

HBOS investors are due to vote on the takeover on December 12.

Editing by Hans Peters, Greg Mahlich, Erica Billingham

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