Mandelson gives green light to HBOS-Lloyds TSB merger
The British government gave Lloyds TSB’s planned merger with HBOS the green light today after overruling competition concerns raised by the Office of Fair Trading (OFT).
Business Secretary Peter Mandelson said the public interest of “preserving the stability of the financial system” outweighed any potential anti-competitive effects.
The OFT said in a report submitted to the Secretary of State that the banking tie-up risked lessening competition in personal current accounts, banking services for small businesses and the mortgage market.
Mandelson said: “I am satisfied that on balance the public interest is best served by allowing this merger to proceed without a reference to the Competition Commission.
“I recognise that there are some concerns about the possible effects of the merger on competition, as set out in the OFT’s report.
“I am asking the Office of Fair Trading to continue to keep the relevant markets under review in order to protect the interests of UK consumers and the British economy.”
The OFT decided in its report on the deal that there was a “realistic prospect” it would be anti-competitive for the UK banking market.
Its concerns on personal current accounts and mortgages were at a national level, while it said the business banking issues related largely to Scotland.
The OFT and Lord Mandelson confirmed they had taken into account the views of the tripartite authorities – the Financial Services Authority, Bank of England and the Treasury – as well as a range of other stakeholders.
“The majority of third parties considered that, in light of the extraordinary conditions in the financial markets, the merger would support financial stability, and was therefore in the public interest,” the OFT said.
Lloyds unveiled its £12bn (€15.24bn) proposed rescue of smaller rival HBOS on September 18.
The deal is set to change the face of UK banking, creating a new banking giant that will be far and way the biggest British bank with nearly a third of the UK mortgage market, more than £300bn (€380bn) of deposits and around 3,000 branches.
Chancellor Alistair Darling confirmed on news of the deal that the Government would waive competition requirements to ensure it went through, saying it was needed to shore up the financial system.
HBOS had seen its shares suffer devastating falls amid concerns over the bank’s future in the days leading up to the deal announcement.
