Lloyds TSB has indicated it will keep the Halifax and Bank of Scotland brands under its £12.2bn takeover of rival HBOS. The bank says the combined group will benefit from a portfolio of “strong and trusted brands”.
It is finalising an emergency takeover of HBOS in a deal that could see up to 40,000 redundancies.
Lloyds TSB already has a number of separate brands within its portfolio, including life insurance and pensions business Scottish Widows, as well as mortgage arm Cheltenham & Gloucester.
Keeping the Halifax brand is likely to result in a stay of execution for agency Delaney Lund Knox Warren, which only last month retained the £18m advertising business for the former building society.
However, with the enlarged group looking to make cost savings of around £1bn a year by 2011, the industry expects consolidation to follow. Lloyds TSB’s advertising is held by RKCR/Y&R and Scottish Widow’s account is held by Leo Burnett.
Lloyds TSB group media is handled by ZenithOptimedia, while Vizeum is incumbent on HBOS.
The merger, which gives the enlarged group more than a quarter of the UK mortgage market, is subject to regulatory approval although it is understood that it will escape normal competition rules. Halifax, HBOS’s retail bank, is already the UK’s biggest mortgage lender, with 20% of the market.
Lloyds TSB says it expects the deal to boost annual earnings by over £1bn a year by 2011 through cost savings and boost its earnings per share by over 20% a year.
Lloyds TSB chairman Sir Victor Blank says: “This will be a unique opportunity to accelerate and extend our strategy and create the UK’s leading financial services group.”
The deal ends uncertainties about the strength of HBOS, which saw its share prices dramatically fall over the past 48 hours.
The Financial Services Authority and the Treasury encouraged the merger, which they believe will ease concerns over the health of the UK banking sector.