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PM 'confident' of Lloyds-HBOS merger.

PRIME MINISTER Gordon Brown said he was confident that Lloyds TSB's planned takeover of struggling Halifax Bank of Scotland (HBOS) would still go ahead.

HBOS's shares fell 12% yesterday and have lost more than half their value in the past two weeks - raising concerns over whether the deal will have to be re-priced to gain the approval of Lloyds TSB shareholders.

But Mr Brown said: "This merger between HBOS and Lloyds TSB is a matter of great detail.

"I'm confident from talking to people involved that this merger is going ahead.

"At the end of the day it is a matter for shareholders not a matter for Government and I believe that some of the issues that were raised at the beginning are being dealt with and I am pretty confident that both parties want to go ahead with this deal."

Asked if he was prepared to bail-out HBOS if the deal collapses, the prime minister said: "We have already dealt with this through helping the merger take place. We changed the competition law to make it possible."

"The shareholders will eventually have to make a decision in a few days times about what is right for them, but I am confident by talking to the leading parties on this that not only do they want to go ahead with this but they are determined to do all the work that will make this possible."

An HBOS spokesman shrugged off the concerns and said: "This is the right deal for HBOS shareholders. We are already working on the integration planning process and it is full steam a head as far as we are concerned."

HBOS sought a takeover by Lloyds TSB to bring stability to the business after a run on its shares in the wake of the collapse of US investment bank Lehman Brothers, and concerns over higher funding costs in frozen inter-bank markets.

If the deal goes ahead, it will create a "mega-bank" with nearly a third of the UK mortgage market and more than pounds 300bn of deposits.


SHELTER FROM THE STORM: A woman takes cover as the rain compounds the miserable financial news coming from the Stock Exchange yesterday PICTURE: Dominic Lipinski/PA
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Publication:Western Mail (Cardiff, Wales)
Date:Oct 1, 2008
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