Lloyds issued a document to shareholders yesterday, revealing the name of the superbank to be Lloyds Banking Group.
The circular also proposes raising directors’ pay by £1 million – although this is to cover an expanded board. And it states that, although the bank will take government financing to boost its capital, it plans to be free of this by next year, allowing it to pay dividends to shareholders.
In a separate trading statement, the bank warned of a sharp fall in profits and said it expected to write off a further £300 million, while HBOS reported total write-downs of more than £5 billion from its risky assets in its statement.
Sir Victor Blank, the chairman of Lloyds and the new entity, says in the circular: “Whilst Lloyds TSB believes that the combination with HBOS will generally provide enhanced opportunities for employees, there will inevitably be some rationalisation of the combined workforce as a result of these initiatives, and consultation will take place with, among others, the recognised trade unions in respect of how this can be best achieved.”
There will be £790 million of cost cutting in UK retail banking, £235 million in insurance and investments, £430 million in wholesale and international banking, and £45 million in other areas, including central and support functions.
However, Eric Daniels, Lloyds TSB’s chief executive, refused to be drawn on job losses – which analysts have predicted could number up to 40,000. HBOS employs about 17,000 in Scotland, and Lloyds about 7,200.
The trade union Unite reacted angrily to the failure to “give any clarity on job security for staff”. Derek Simpson, its joint general secretary, said: “It is now time to start thinking about the human consequences of this takeover. None of the staff at these two banks should be forced out.”
Tavish Scott, the Scottish Liberal Democrats leader, said: “The UK government must ask why losing 20,000 jobs is compatible with billions of pounds of taxpayers’ money being put in Lloyds TSB’s piggy bank.”
He also claimed a rival offer for HBOS was being dealt with in a “ramshackle and chaotic way” by ministers.
Alex Neil, the SNP MSP who has campaigned against the takeover since it was proposed, described the prospectus as “dishonest”.
He said: “I only hope shareholders will not be hoodwinked into voting for this takeover, which will be bad for Scotland, bad for shareholders, bad for customers and which will jack up unemployment by up to 40,000 people across Britain.”
Investment bank advisers close to the Scottish Government are exploring ways in which a legal challenge could be mounted against the decision by Business Minister Lord Mandelson to waive aside Office of Fair Trading concerns about the effects of the takeover in reducing competition. A key reason for a legal challenge would be to allow time for other possible contenders to work on bids.
The Scotsman told yesterday how Mr Neil was involved in an alternative bid for HBOS, after the newspaper reported on Saturday that a foreign bank was also interested in the group.
Alistair Darling, the Chancellor, said: “Legally, there is nothing to stop any third party coming through and putting in a bid. If they want to talk to the government about it, they can do that.”
Both Lloyds and HBOS remained insistent the deal would go ahead, with Mr Daniels denying knowledge of any other bids, beyond what he had “read in the newspapers”.
The circular says the Treasury and the Lloyds board will work together to appoint two new independent directors. The Treasury says “it currently has no intentions or strategic plans concerning the enlarged group or its business or employees”.
Brown calls for strong leadership from the US
THE incoming US president must offer more leadership if the world is to bounce back from financial turmoil, Gordon Brown said yesterday.
The Prime Minister insisted that retreating to isolation and protectionism could wreck chances for a quick and sustainable recovery. Delivering a keynote speech in Abu Dhabi on the eve of the vote, he also highlighted the importance of the Middle East peace process to achieving co-operation.
Mr Brown said American influence had been “vital” for moves such as co-ordinating an international 0.5 per cent interest rate cut last month.
“I know that leadership will and must continue,” he said. “The next stage of globalisation will require even more international co-operation, with American leadership crucial to its success.
“In the coming weeks and months, the whole world will want to work closely with America on a shared common agenda to bring growth and jobs back to our economies; to give greater stability to our financial system; to defeat protectionism in favour of free trade; and of course to work for a more secure world – and in the Middle East, peace.”
Mr Brown stressed that all governments had a duty to work together to tackle the fallout from the credit crunch. “Because no country, no matter how big, can solve these challenges alone,” he said. “And people in every country want to know that every possible course of action is being pursued.”
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