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January 4, 2009

HBOS pension trustees ask court to delay merger

by Gill Montia

Story link: HBOS pension trustees ask court to delay merger

Fears that the merger of Lloyds TSB and HBOS could be delayed by the trustees of the HBOS pension scheme have heightened.

The trustees say they will be asking the Court of Session in Edinburgh to put the deal on hold because of concerns that the scheme’s 80,000 members could lose out.

The fund has a deficit of between £3 billion and £5 billion and so far, Lloyds TSB has refused to guarantee certain payments.

Scheme of Arrangement proceedings are due to take place on 12th January but the trustees are reported to be deeply concerned that they have not received any proposals from Lloyds TSB for supporting the HBOS scheme.

They will therefore be asking the court to withhold approval until Lloyds has clarified and documented its proposals.

Lloyds is understood to prefer that the liabilities of the HBOS pension scheme and those of its own, remain the liabilities of two subsidiary companies, rather than the new Lloyds Banking Group.

The bank has said it will stand behind HBOS’s pension obligations but under the arrangements proposed, would not be legally bound to it.

The merger has already been agreed by shareholders of both banks and is scheduled for completion later this month.

The new group will have around 3,000 branches and a total staff of 143,000.

 

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