HBOS share boost as PM backs Lloyds bid

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Fears had been growing that the rescue takeover by Lloyds might be rejected by both sets of shareholders or that the terms of the deal would be slashed as the banking crisis grew.

But Gordon Brown made it clear he expects the deal to go ahead and would push every lever to ensure that the rescue of HBOS was conducted in an orderly way.

At the same time Standard Life, which is a top 10 shareholder of both banks and owns around 3% of HBOS and 1.5% of Lloyds TSB, was reported to be supportive of the bid.

Standard Life was dealt a massive blow earlier this week when the Government nationalised Bradford & Bingley. The insurer was B&B's largest shareholder with a 9.6% stake.

HBOS shares soared 20.7p to 143.1p while Lloyds shares rose 283/4 to 255¼p.

That means the value of Lloyds' share-swap offer is now 212p which is much closer to the original 232p when the bid was first launched.

But the offer is still at a 32% discount to the HBOS share price.

That indicates many investors still do not think the deal will be done on the current terms.