HBOS says nationalisation a risk if Lloyds bid rejected

November 14, 2008 by · Leave a Comment
Filed under: Global News 

We it looks like this problem is still growing as this is being written and there is no end in sight.  The shareholders will approve the deal or they stand to get their equity wiped out.   Not sure what the bondholders think, they might prefer nationalisation if the government is going to make their investment whole again.  This should be interesting.


HBOS Plc , Britain’s biggest home lender, could have to be nationalised if its shareholders do not vote for a proposed 5.7 billion pound takeover by Lloyds TSB, its chairman warned on Friday.

HBOS could need to raise more than 12 billion pounds ($17.8 billion) at a more expensive rate than it has agreed to pay under the UK government’s rescue plan, which is dependent on the Lloyds deal going through, Dennis Stevenson said in a letter to shareholders on the vote, which will take place on Dec. 12.


If they vote against the deal HBOS will need to find alternative methods of increasing its capital to the plan agreed with Lloyds and the government last month.


“There can be no certainty as to the sources of capital if the resolutions are not passed,” Stevenson told shareholders.


The government would take “appropriate action” to ensure the stability of the banking system, he said. Such action might include the issuance of shares to the government “or the loss of independent or private sector status for HBOS.”

Full Source: Reuters


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