Bankers' 'independent HBoS' bid under fire from investors

Published on Tuesday 11 November 2008 08:44

THE bid by two former Scottish bankers to stop the takeover of HBoS has been heavily criticised by politicians and investors.

Sir Peter Burt and Sir George Mathewson, former chief executives of Bank of Scotland and Royal Bank of Scotland respectively, have launched a strategy to keep HBoS independent in the hope of winning over the company's 2.1 million shareholders.

Their proposal would see them take the reigns and current chairman Lord Stevenson and chief executive Andy Hornby step down.

They say that the Lloyds TSB takeover would be bad news for customers, shareholders and staff. There are fears that, as well as the thousands of jobs at risk from the merger, the iconic Edinburgh headquarters could also be lost.

But leading figures today discredited the bid.

David Mitchell, the president of the Scottish Conservatives, said the pair had overseen "the beginnings of the demise" of the two banks in their previous roles.

One of HBoS's largest institutional shareholders said: "They have no credibility, no support. It is ludicrous. We are not taking the approach remotely seriously."

Their vision of an "independent HBoS" was aimed at the smaller shareholders, capturing their imagination and ultimately calling an extraordinary general meeting at which chairman Lord Stevenson Mr Horby would be removed.

But as yesterday wore on the proposals appeared to lose momentum and credibility as criticism from investors and analysts grew.

While First Minister Alex Salmond isn't publicly supporting the duo's coup attempt, he said: "If public money is going in to support the financial sector then it is reasonable to find out whether we can do that and avoid consequences like thousands of job losses, the loss of decision making and what we already know from the Office of Fair Trading – a substantial diminution of competition throughout the economy, affecting businesses and households."

Defending their move, Sir George said: "We believe HBoS itself can be independent given the new capitalisation of the banks. We also believe there may well be another alternative, other than Lloyds, that will give better shareholder value and a better outcome for the whole of the UK."

Meanwhile it has been suggested that an international "secret suitor" waiting in the wings to swoop for HBoS is the Bank of China.

If the acquisition were to come to fruition, it would represent the most ambitious international takeover by a Chinese institution.

An HBoS spokesman emphasised the bank's recommended bid remained from Lloyds TSB.