HBOS takeover is a 'shotgun marriage', says action group

Published on Monday 1 December 2008 00:53

THE takeover of HBOS by Lloyds TSB was condemned as a "shotgun marriage" yesterday by one of the leaders of the group behind a last-ditch legal attempt to stop the deal.

The Merger Action Group (MAG) – made up of businessmen, bank customers and shareholders – is seeking a legal ruling against Business Secretary Lord Mandelson's decision to set aside the Office of Fair Trading's (OFT) concerns over competition policy when he waved through the deal.

Group spokesman Malcolm Fraser said: "What we are wanting to do is make a level playing field so other people can look at whether there is an independent option for a stand-alone bank based in Edinburgh.

"That is a better bid possible for shareholders than the shotgun marriage that is on the table at the moment."

Mr Fraser, an Edinburgh architect who was responsible for the repair and renewal of HBOS's historic headquarters in the city, said the deal with Lloyds TSB would mean the loss of a "vastly important national institution" which would be merged into a "superbank".

He added: "We believe at the time the decision to force the merger was made, the decision was unlawful. There were not grounds to make that decision."

The Scotsman revealed on Saturday that MAG is to seek the ruling from the Competition Appeal Tribunal (CAT) – a specialist legal body whose function is to decide appeals on competition issues. Tribunal cases are heard by panels chaired by a judge who sits with two experts.

The UK government overruled competition concerns raised by the Office of Fair Trading when it gave the deal the green light. Lord Mandelson said at the time that the public interest of "preserving the stability of the financial system" outweighed any potential anti-competitive effects.

But MAG claims that the due legal process has been ignored and it is asking the CAT to sit in Edinburgh to hear the case, as both banks are registered in Scotland. The action group hopes to be able to reveal the names of supporters from politics and business over the next few days, but will only do so when those involved have signed up to the group, rather than just announcing their names in advance.

The group already has the support of 150 people who have signed up to its website www.mergeractiongroup.org. uk and the leaders hope to have 1,000 public backers by the end of the week.

It will cost a "six-figure sum" to pursue the case through the appeal tribunal, but again the organisers believe they will raise the necessary funds.

Alex Neil, an SNP MSP and consistent critic of the takeover, said MAG's challenge should win support from "business, savers and investors across Scotland". He said: "The OFT report makes clear that in creating a new 'superbank' the UK government's forced merger of Lloyds TSB and HBOS will harm the interests of customers, businesses and the mortgage market.

"Add to that the impact this will have on employment in Scotland and across the UK and it is difficult to see any benefit for anyone other than Gordon Brown or the management of both banks from this deal."

HBOS spokesman Shane O'Riordain said yesterday that the legal bid by MAG had "no merit whatsoever".

He added: "It is an unnecessary distraction and we would ask this group to reconsider their action. Our recommended transaction with Lloyds TSB is in the interests of all our stakeholders, including those in Scotland."