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17/09/2008
Merger May 'Save' Halifax
Financial giant Halifax Bank of Scotland, (HBOS) the UK's largest mortgage provider, has today been hit hard by a whirlwind of financial speculation - but instead of faltering, is on the brink of a major coup by brokering a merger to create a new, enlarged business.
HBOS has confirmed that it is in advanced talks with Lloyds TSB about creating a UK retail banking giant worth £30bn.
The Government has also said it will over-rule any concerns that competition authorities may raise.
The BBC is reporting that the Prime Minister is even involved in negotiating the deal, and has said that it has the blessing of UK authorities.
Any deal would end uncertainty about the strength of Halifax-Bank of Scotland after a run on its shares.
The concerns surrounding parent company HBOS - which has £160bn in deposits and £256bn of outstanding mortgages - are also large, but are in part rumour, and only part fact.
A series of major US institutions previously thought invincible, such as Bear Stearns, Fannie Mae and Freddie Mac, Merrill Lynch, Lehman Brothers and now AIG have already run into difficulties, and traders simply asked "Who next?" and then seized on the slightest hint of any real - or perceived - weakness in the British banks to sell into a plummeting market.
Later, confidence was further undermined with the news that AIG Life had suspended withdrawals from two of its British funds yesterday, after being inundated with requests for redemptions following news that the insurer is on the verge of collapse.
This is the first time during the credit crunch that retail investment funds, rather than bank deposits, have been threatened.
Given its exposure to the property market the turbulence centred on Halifax Bank of Scotland Group (HBOS): shares in the bank were down almost 40% at one point yesterday, although it ended the day with a fifth of its worth destroyed, while the Royal Bank of Scotland lost a tenth of its value.
The FTSE 100 also fell to a three-year low - more than £500bn was been wiped off UK shares this year.
Early news of a merger, valuing HBOS shares at 300 pence, initially came from BBC Business Editor, Robert Peston.
(BMcC)
HBOS has confirmed that it is in advanced talks with Lloyds TSB about creating a UK retail banking giant worth £30bn.
The Government has also said it will over-rule any concerns that competition authorities may raise.
The BBC is reporting that the Prime Minister is even involved in negotiating the deal, and has said that it has the blessing of UK authorities.
Any deal would end uncertainty about the strength of Halifax-Bank of Scotland after a run on its shares.
The concerns surrounding parent company HBOS - which has £160bn in deposits and £256bn of outstanding mortgages - are also large, but are in part rumour, and only part fact.
A series of major US institutions previously thought invincible, such as Bear Stearns, Fannie Mae and Freddie Mac, Merrill Lynch, Lehman Brothers and now AIG have already run into difficulties, and traders simply asked "Who next?" and then seized on the slightest hint of any real - or perceived - weakness in the British banks to sell into a plummeting market.
Later, confidence was further undermined with the news that AIG Life had suspended withdrawals from two of its British funds yesterday, after being inundated with requests for redemptions following news that the insurer is on the verge of collapse.
This is the first time during the credit crunch that retail investment funds, rather than bank deposits, have been threatened.
Given its exposure to the property market the turbulence centred on Halifax Bank of Scotland Group (HBOS): shares in the bank were down almost 40% at one point yesterday, although it ended the day with a fifth of its worth destroyed, while the Royal Bank of Scotland lost a tenth of its value.
The FTSE 100 also fell to a three-year low - more than £500bn was been wiped off UK shares this year.
Early news of a merger, valuing HBOS shares at 300 pence, initially came from BBC Business Editor, Robert Peston.
(BMcC)
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Bank Of England Maintains Bank Rate At 0.5%
The Bank of England's Monetary Policy Committee has voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £375bn.
Bank Of England Maintains Bank Rate At 0.5%
The Bank of England's Monetary Policy Committee has voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £375bn.
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