Lloyds TSB-HBOS Merger Approved

Investors in Lloyds TSB have overwhelmingly given their backing to the proposed merger of the bank with HBOS and to the government bailout plan. The move paves the way for the merger to be completed by January.

This was always coming as the deal is a strong one for Lloyds TSB in its ambitions to grow into the UK’s dominant retail bank. The key issue now is how many jobs will be lost after the link-up? Some estimates have said up to 40,000 jobs could be cut following the merger, which seems a little high, but it will definitely be significant and, depending on when the announcement comes, will provide yet more gloom for our banking sector.

Depression Economics: Krugman

In an op-ed for The New York Times, Paul Krugman says we have entered a stage of depression economics, by which federal methods to avoid recessionary conditions are greeted with little response from markets more concerned with prevailing levels of negative sentiment.

Considering the lack of protracted resurgence from banks in the UK following the bailout and the passing of the competition-threatening Lloyds TSB-HBOS merger, this seems like a sound theory to define the current lack of positive market movement on the back of these government measures. If he’s right, which I would say he is, then Obama is facing a very difficult sentiment climate when he comes to power, one which may not respond to even the most aggressive and large stimulus plan.

Rival Bidder for HBOS

Only a day after authorities cleared the Lloyds TSB-HBOS merger, a rival bid has apparently emerged for the latter from an unnamed source, threatening to halt the mega-deal between the retail giants. There were rumours around the original bid that a consortium of Scottish investors may launch a bid for Bank of Scotland to try and keep the bank under the control of Scots so maybe its that. Watch this space on this one, and read the whole story at the BBC.