HBOS dismisses legal bid to thwart Lloyds TSB deal

Published on Saturday 29 November 2008 18:51

HBOS launched a scathing attack on a last-ditch legal challenge designed to scupper its takeover by Lloyds TSB.

The bid has been launched by a group of prominent businessmen, who are objecting to the deal which puts 40,000 jobs at risk.

But HBOS spokesman Shane O'Riordain said: "We believe this appeal has no merit whatsoever. 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. Their action is not in the interests of HBOS."

The newly formed Merger Action Group, involving businessmen, customers, account holders and shareholders, has claimed Business Secretary Lord Mandelson acted unlawfully by going ahead with the move without referring it to the Competition Appeal Tribunal (CAT).

The group, which includes Tim Noble, Peter De Vink and Dan Macdonald, the chief executive of Macdonald Estates, has submitted a 37-page appeal with CAT,

a judicial body that can overrule ministerial decisions to waive competition rules, which, in this case, allowed the deal to go ahead.

Sources said the group's action would not be able to overturn the decision itself but would, if successful, amount to a judicial review of the decision-making process.

And the most it could achieve would be for the Secretary of State to look again at this process to make it appeal-proof, it was argued.

The sources also pointed to the need for financial stability and argued the near collapse this week of Citigroup showed this was still a consideration.

A preliminary hearing is expected to take place this week to study whether the group has a legitimate reason to raise the action. Alex Neil, the SNP MSP who has led the Holyrood campaign against the merger, gave his backing to the move.

He said: "This is a serious case for the Competition Appeals Tribunal and is their chance to show that riding roughshod over competition law to keep the Prime Minister happy is not acceptable. Labour has gone out of its way to see that no other deal could be put forward and that no alternative was ever offered to HBOS. That is something that must be looked into.

"The UK Government and the Labour party may be happy to roll over and see competition in Scotland's banking sector destroyed, but I am not.

"With the UK Government increasing its financial support to RBS to keep it on the road as an independent bank, there is absolutely no reason for this merger to go ahead.

"HBOS requires little additional recapitalisation to remain as an independent bank, avoiding horrific job losses across Scotland and the UK."

He added: "With so many questions over this merger and the considerable damage it will do to competition, this legal bid should win support from business, savers and investors across Scotland."

CAT backing could force Mandelson to send the proposed merger to the Competition Commission.

The group is asking for the tribunal to sit in Edinburgh as Lloyds TSB and HBOS are both registered Scottish companies.

MAG has engaged Brussels-based Scots advocate Ian Forrester QC, a specialist in European and competition law, to lead the appeal.

The group wants to act as a rallying point for interested parties across the UK. It will be engaging with trade unions, industry bodies, consumer associations and communities across the country in an attempt to ensure the public interest is protected.