Lloyds to buy mortgage lender HBOS
Share Now on:
TEXT OF STORY
Stacey Vanek-Smith: A big deal going down in that country (the UK) this morning. British bank Lloyds it will purchase the UK’s biggest mortgage lender, HBOS for a cool $22 billion. It will create Britain’s biggest bank. Megan Williams has more.
Megan Williams: Call it a buyout or a rescue, the deal is good for the fast-sinking HBOS and great for Lloyds. By scooping up HBOS, whose shares lost half their value this week, Lloyds will now control almost a third of the British mortgage market.
The UK government backed the deal after HBOS depositors and lenders began pulling out their credit, fearing the company couldn’t back its mortgages. Banking analyst Simon Maughan says the deal bears the heavy fingerprint of government, with little cost-saving advantages.
Simon Maughan: It’s clearly a deal driven by the panic in the credit markets. Costs savings from the deal are disappointing at only 10 percent. You’d expect a large in-market merger like this to be taking out at least 20 percent of the costs.
That said, Lloyds will now have a quarter of the UK savings and current account market — a combined 39 million customer accounts. And, says Maughan, it will also get its hands on what would, in normal times, be anti-competitive market shares.
I’m Megan Williams for Marketplace.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.
You make our
Support nonprofit news you love with a gift today.