Related Companies

• HBOS
• Lloyds TSB Group

Related Indices

• FTSE All-Share
• FTSEurofirst 300
• FTSE 350
• FTSE 100

Related Sectors

• Banks

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By Jamil Hussein

Date: Wednesday 08 Oct 2008

LONDON (ShareCast) - HBOS slipped from earlier highs but still posted good gains, though suitor Lloyds was in the red as traders speculated whether a deal between the two will still go through.

Reports suggest that Lloyds TSB is renegotiating terms of its expected takeover of the mortgage lender. The bank is still however confident that a deal will go through.

Lloyds released a statement earlier in the day saying that it “continues to progress the proposed acquisition of HBOS and is working with HBOS management on all aspects of the transaction."

There had been speculation in recent weeks that the deal could be re-negotiated because of the slump in the HBOS’ shares.

But the government’s decision to bail-out the UK banking system with its £50bn rescue package means that HBOS' bargaining power has also improved, which means that it could pull out of the deal as it may not need rescuing anymore.

Lloyds agreed an all-share offer with HBOS last month worth 0.83 Lloyds shares for every HBOS share held, valuing the bid at £12.2bn at that time.

Lloyds today said it welcomed the move by the government but did not say whether it will take up the government’s offer, while HBOS is also yet to confirm whether it will sign up to the scheme.

In a separate development, HBOS said it will sell Western Australia (BankWest) and St Andrew's Australia to Commonwealth Bank of Australia (CBA) for about A$2.5bn to boost its balance sheet.

• News Channel