HBOS 'faces nationalisation' if takeover rejected

Published on Saturday 15 November 2008 10:04

HALIFAX Bank of Scotland could have to be nationalised if shareholders reject a takeover by Lloyds TSB, the bank's chairman has said.

HBOS chairman Dennis Stevenson said the bank might need to raise at least 12 billion in capital if investors threw out the deal and a potential 11.5 billion injection of taxpayers' cash.

If HBOS decided to go it alone, there was "no certainty" over sources of funding, he added. The bank could be forced to raise dearer funds from the Treasury.

Mr Stevenson was writing in a circular to shareholders ahead of a meeting in Birmingham to approve the deal on December 12.

Lloyds TSB is itself raising 5.5 billion in new funds underwritten by the taxpayer.

Meanwhile the bank has rejected claims that it was in danger of suffering a Northern Rock-style run as customers withdrew savings just before the takeover announcement.

One estimate based on analysts' research notes is that as much as 30bn could have been withdrawn. The bank has rejected this figure while conceding there was a withdrawal of deposits in September.