HBOS shareholders approve Lloyds TSB takeover

Published on Friday 12 December 2008 09:13

HBOS shareholders today overwhelmingly approved the bank's takeover by Lloyds TSB and an £11.5 billion taxpayer-funded boost.

Based on votes cast before the meeting, the moves were supported by an 84 per cent majority of individual shareholders, and 98 per cent by the value of shares voted.

The combined bank is likely to be 43.5 per cent owned by the taxpayer following capital raising by HBOS and Lloyds TSB – leaving existing HBOS shareholders with just 20 per cent of the new bank.

The chairman of HBOS had earlier apologised for the ailing bank's plight.

Dennis Stevenson said the board was sorry about the financial impact of the crisis on investors and said he was "neither happy nor proud" as chairman.

He told the meeting in Birmingham – delayed for half an hour by a serious accident on the M6 – that the world was living through "the most pronounced financial crisis since the Great Depression".

The merger with Lloyds TSB will create a superbank with 145,000 staff and 3,000 branches.

HBOS, which posted another gloomy trading update today, was facing conditions "frankly more difficult by the day", Mr Stevenson said.

The Lloyds takeover has been opposed by some businessmen, but the board considered all alternatives, the chairman added.

"I cannot say too strongly that your board looked at every possible solution... we do not cede our independence lightly."

But investors voiced criticism of the bank's senior management.

Shareholder Peter Hapworth said he was "appalled" at how HBOS had been run in the last few years.

He said: "Let's face facts, it is a bank like yours along with a number of other banks that have caused the crisis in the first place. You all went dashing for short-term gain to fulfil bonuses and salaries."

Mr Hapworth said the banks were now trying to hide behind "the crisis that they had caused".

Another investor, Brian Lockley, said: "What I've heard so far reminds me of my old school reports – could do better."

Speakers expressed concerns over the pensions of the bank staff following the merger with Lloyds.

But the HBOS chairman said: "We are proud of the fact that the HBOS pension scheme is very well funded as I stand here today.

"We are confident that it will continue to be well funded, if not better funded, if the merger with Lloyds goes ahead."

Unions, fearful of thousands of job losses which could come as a result of the merger, protested outside the meeting today.

Protesters handed out mock ballot papers to investors attending the meeting, urging shareholders to consider the impact of the takeover on staff.

Rob MacGregor, Unite's national secretary with responsibility for finance, said: "We are obviously concerned about redundancies... assurances on jobs have been few and far between."

Questioned in the meeting by Unite's representatives, Mr Stevenson admitted that he had had "no specific guarantees" on jobs and staff terms and conditions, although he added that Lloyds would approach the takeover "carefully and considerately".

Mr Stevenson was also criticised for accepting a lower offer for the business than initially agreed, but he said this was down to the dire situation and weak bargaining position the business found itself in as wholesale markets shut down.

He said: "In the extreme volatility we found ourselves in, we had to negotiate the best deal we could... it is as simple as that."

Commenting on the results of the HBOS takeover vote, Tavish Scott, leader of the Liberal Democrats in Scotland said: "I am disappointed, but not surprised that this deal has been approved.

"This is bad news for jobs and competition in Scotland. Scottish customers and businesses will face higher bank charges in the future as a result.

"The UK Government and the HBOS board were wrong to roll this deal through so smoothly."