London: British bank Lloyds TSB announced on Thursday it was taking over distressed rival Halifax Bank of Scotland (HBOS) in a £12.2 billion deal.
The share deal comes after HBOS shares plummeted in recent trading following days of global economic turmoil, but marks yet another point of distress in the global financial crisis.
Sir Victor Blank, chairman of Lloyds TSB, said the deal offered a “good deal for customers and shareholders” while his HBOS counterpart Dennis Stevenson said it was “the right transaction for HBOS”.
HBOS shares were down 19.2% at the close of trading on 17 September, against the backdrop of the dramatic collapse of US investment bank Lehman Brothers, nationalisation of US insurance giant AIG, and shock after shock in financial markets.
Heavy losses on 17 Seotember prompted the Financial Services Authority (FSA) to issue a statement saying HBOS was well-funded, in an attempt to avoid a flood of savers trying to withdraw their money.
Prior to the reports of the takeover talks, HBOS shares had nosedived 52% to a low of 88 pence, as investors took fright at the state of the global banking sector despite news of the rescue for AIG, which was on the verge of bankruptcy.
News of takeover talks for HBOS had helped push the bank’s stock back into the black, at one point rising to 220 pence.
But at the close of trading, HBOS was down 19.2% at 147.1 pence, its third day running of heavy losses. Lloyds TSB shares were unchanged at 279.75 pence.