Banking News Lloyds TSB HBOS Takeover Meets New Opposition 2375
Lloyds TSB HBOS takeover meets new opposition
20 October 2008 / by Rebecca Sargent
Lloyds TSB is seeking liquidity to the tune of £5.5billion, whereas HBOS is reportedly raising £11.5billion through the Government scheme. However, in return for the capital, the banks are expected to pay back 12 per cent interest on the loans and hold back on shareholder dividend payments until the Government has been repaid.
It is these rules that have sparked outrage from trade unions including the UK Shareholders Association (UKSA) that believes the Government’s terms are ‘enormously damaging’ to those shareholders who rely on dividends to provide an income.
Commenting, Director of UKSA Roger Lawson, said: “I have received many emails and telephone calls from people who are very distressed about these proposals as they rely on the dividends from these banks for day-to-day living expenses. What do they live on for the next five years?
“They cannot sell the shares and switch to other investments because they are already showing a massive capital loss and would not get a similar income from other investment grade stocks.
“These are typically retired folks who thought they had made reasonable provision for their old age, but now find the rules redrawn to undermine that.”
As a result, the UKSA is urging the Government to reconsider its terms and ‘take a more enlightened view’ on the reasons for investing in stocks and shares, particularly with regard to pensions and retirement investments. Until such action is taken, the UKSA is advising Lloyds TSB and HBOS shareholders to think carefully before voting in favour of the takeover.
In another camp, Scottish First Minister and Scottish National Party (SNP) leader, Alex Salmond MSP told an SNP conference that there must be no merger between Lloyds TSB and HBOS until the possibility of individual rescue has been ruled out.
Mr Salmond commented: “The Bank of Scotland has been around for 300 years. It is hard wired into the social and economic fabric of Scotland. It does not deserve to be just cast aside as a consequence of the age of irresponsibility.”
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