Halifax Bank of Scotland (HBOS) shareholders have overwhelmingly agreed a £12.2bn takeover deal with rival Lloyds TSB. It follows a legal challenge to the takeover, which was rejected earlier this week.
Ahead of the meeting today (December 12), HBOS shares fell more than 22% as the bank said it was operating in “increasingly difficult market conditions” and bad debts were rising.
When the deal is completed, it will lead to the creation of a banking giant, to be known as Lloyds Banking Group, with 145,000 staff and 3,000 branches.
The group will house brands including Lloyds TSB, Bank of Scotland and Halifax, as well as Scottish Widows, Intelligent Finance and Cheltenham & Gloucester. Executives have already confirmed that the Halifax and Bank of Scotland brands will be retained.
The enlarged group is looking to make cost savings of around £1bn a year by 2011, and the industry expects marketing services consolidation to follow (MW.co.uk September 18). Both Lloyds TSB and HBOS spend over £40m each on advertising.
Delaney Lund Knox Warren handles advertising for Halifax, 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 the incumbent on HBOS.
The Government agreed the takeover in October, over-ruling competition concerns raised by the Office of Fair Trading. Business Secretary Lord Mandelson said at the time that the public interest of “preserving the stability of the financial system” outweighed any potential anti-competitive effects.
On Wednesday the Competition Appeal Tribunal was asked to decide whether the Government had been right to bypass competition concerns in allowing HBOS to be rescued, but rejected the appeal.