Salar posted on September 17, 2008 22:07
HBOS has confirmed it is in advanced talks with Lloyds TSB about creating a UK retail banking giant worth £30bn.
According to the BBC the two firms are in "advanced talks" over a combination that would create a group with a market value of around £30bn and more than £300bn of deposits. This deal - structured as a takeover by Lloyds - would end uncertainty about the health of HBOS, which has seen its share price plunge over the last three days amid concerns about its funding position.
BBC has added that the prime minister was involved in negotiating the deal, which has the blessing of UK authorities. A deal would end uncertainty about the strength of Halifax-Bank of Scotland after a run on its shares.
The advanced talks are being encouraged by both the Treasury and Financial Services Authority (FSA) as a deal will ease concerns about the health of the UK banking sector, our business editor added. Analysts have said HBOS needs to refinance more than £100bn of funding during the coming months, which could be more challenging after the blow to confidence from Lehman's demise
It is a fast moving landscape - but here are the top news that the credit crunch has wreaked havoc on some of the world's financial institutions in recent days.
Barclays Bank is to buy some Lehman Brothers assets after the fourth-largest US investment bank, filed for bankruptcy protection, dealing a blow to the fragile global financial system.
The US Treasury stepped in with an $85bn rescue package to bail out AIG amid fears the group, once the world's largest insurer, could face collapse.
Bank of America bought Merrill Lynch in a $50bn deal - making the Merrill the third top US investment banks to fall prey to the sub-prime crisis within six months.
In Russia, trading on the country's main stock exchanges was halted after steep falls this week.
Since the beginning of the current extreme difficulties in the financial markets, the Financial Services Authority has worked intensively with all major UK banks to ensure they have credible capital and liquidity plans.
Meanwhile, in the UK recent economic news has done little to lift the gloom, with unemployment rising once again as the number of job vacancies fell. There was a real concern that any run on HBOS shares would create enough fear among the bank's financiers - providers of wholesale credit who give the bank its money - for there to be a withdrawal of credit for HBOS.