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Merger heralds jobs bloodbath for South-East
Jonathan Prynn18.09.08
Fears that London is heading for a jobs bloodbath erupted today as the global financial meltdown gathered pace.
Lloyds TSB and HBOS confirmed that their merger would trigger thousands of job losses, many of which will be concentrated in the capital.
Lloyds TSB and HBOS, which unveiled the terms of their merger this morning, said there would be " significant cost savings" through job cuts and branch closures. The banks said the focus would be "to keep jobs in Scotland" raising fears that the brunt of the cuts will be felt in the South-East.
Unions warned that ordinary workers were being made the victims of the folly of overpaid bankers. Unite deputy general secretary Graham Goddard said: "Finance workers should not have to pay the price for the greed and excess of the short sellers and speculators."
Chancellor Alistair Darling today admitted he was worried about protecting jobs, saying: "I've spoken to Lloyds TSB as well as to HBOS and I am extremely concerned."
About 40 per cent of people in Britain will be customers of the "superbank" formed by the merger. Many could end up paying higher mortgage rates and interest charges.
Details of the £12.2 billion rescue takeover of the owner of Halifax and Bank of Scotland were unveiled at 7am after three days of frenzied negotiation. In a statement to the Stock Exchange, the two banks outlined plans for "the UK's leading financial services company".
The proposed cost cuts will require job losses from the combined 140,000 workforce and dozens of branch closures. The annual cost savings from the merger are expected to reach £1 billion, or about 10 per cent of the total cost base, by 2011.
"Significant cost savings can be made by combining the networks and back offices of Lloyds TSB and HBOS," it went on, and "there will be " consolidation of head office functions". HBOS has 1,100 branches, and Lloyds TSB 1,900, including 160 of its Cheltenham & Gloucester arm.
The deal, still to be approved by shareholders, will keep the Bank of Scotland headquarters in Edinburgh and it will continue to print Bank of Scotland bank notes. But it will be headed by Lloyds TSB bosses chairman Sir Victor Blank and chief executive Eric Daniels.
The extraordinary merger, which normally would be expected to be blocked by competition authorities, has been cobbled together as HBOS shares came under sustained attack in the stock market. At one stage yesterday they had fallen 70 per cent since the start of the week. But Mr Daniels denied that the merger was a "shotgun marriage".
Investors were worried HBOS is too dependent on the paralysed wholesale lending markets and falling UK mortgage market. There were fears investors would start withdrawing their savings, creating a more dangerous version of Northern Rock.
Business Secretary John Hutton confirmed the Government will push through the merger to "ensure the stability of the UK financial system". An order allowing this will be laid before Parliament after the summer recess.
Mr Darling dismissed fears over the cut in competition. "If we hadn't done it, the alternative was very bleak indeed," he told BBC Radio 4.
There are still concerns that the deal could be blocked by institutional shareholders in HBOS unhappy about the terms. The deal will need 75 per cent approval to go through.
