HBOS - 'Massive job losses are now a certainty'

Published on Saturday 13 December 2008 10:49

WITH dire warnings of impending doom fresh in their minds, it was no great shock that HBOS shareholders have voted overwhelmingly for the bank to be swallowed up by Llyods TSB. Like their RBS counterparts last month, who found themselves forced to accept a government rescue package, they had no choice. As Alex Salmond says "What's done is done", and it's time to move on.

Despite many attempts to derail the process, the result of the vote was never in serious doubt since the Government gave the green light for the takeover in October. No viable alternative plan was ever lodged and the big institutions never wavered from their support of the plan.

But that did not stop HBOS issuing a rather clumsy prompt in advance of yesterday's meeting that bad debts on corporate loans had jumped to 3.3bn from 1.7bn. Call it honesty or an attempt to ensure that all the voting sheep remained safely in the pen, but the main effect was to drive share prices down – HBOS by 22 per cent and Lloyds by 17 per cent.

Massive job losses are now a certainty and it is to be expected that Edinburgh will be hit hard. But it is not the takeover itself that has brought this about.

As an independent organisation HBOS was in deep trouble and in danger of going bust and any rescue would inevitably have resulted in a slimming down.

And that loss of independence for the Bank of Scotland brand which so many bemoan did not happen yesterday. It took place when the Halifax name was placed in front after the shotgun merger in 2001 when the real power began to drain from Edinburgh, no matter how many times James Crosby made his way north.

But some comfort can be taken from the fact that both the RBS and now the BoS brands will live on. And in the case of BoS it could have fallen into more unfriendly hands.

Lloyds TSB already has a strong presence in Edinburgh and plays a full part in the business and civic life, as does its head Susan Rice. Including its Scottish Widows arm it employs 6000 people in the Capital and The Lloyds TSB Foundation distributes 7 million a year to Scottish charities.

With an assurance that there will be a Scottish board to look after interests north of the Border there is no reason why BoS cannot continue to thrive as a Scottish bank in the same way as the Clydesdale has under the National Australian Bank.