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November 10, 2008

Old guard move in on HBOS / Lloyds TSB merger

by Gill Montia

Story link: Old guard move in on HBOS / Lloyds TSB merger

Former chief executives of Royal Bank of Scotland (RBS) and Bank of Scotland (BoS) have written to HBOS chairman, Lord Stevenson, calling for his resignation and that of his chief executive, Andy Hornby.

Sir George Mathewson (formerly of RBS) and Sir Peter Burt (formerly of BoS) are convinced that HBOS shareholders and staff will lose out if the proposed merger with Lloyds TSB goes ahead.

The former banking chiefs say they are working on an alternative plan that would make use of the Government’s bank bail-out package and keep HBOS independent.

Their letter also suggests that events that have followed the Government-brokered deal between Lloyds TSB and HBOS mean a merger is no longer in anyone’s best interests.

Sir Peter and Sir George are offering to take up the roles of chairman and chief executive (respectively) of HBOS while a new direction for the business is developed.

It is understood that both men will become active with HBOS shareholders, who have yet to approve the merger with Lloyds TSB, if their proposals are ignored.

Sir Peter Burt oversaw the merger of BoS and Halifax and served as deputy chairman of the HBOS group between 2001 and 2003. Sir George Mathewson retired from RBS in April 2006.

In related news, Lloyds TSB announced last week that it intends to make annual savings of £1.5 billion through its merger with HBOS.

The latest estimate of cost efficiencies is £500,000 above an earlier £1 billion target and has led to predictions that up to 30,000 jobs could go.

 

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