BBC Homepage World Service Education
BBC Homepagelow graphics version | feedback | help
BBC News Online
 You are in: Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Sunday, 3 December, 2000, 15:15 GMT
Abbey 'preparing 25bn merger'
Abbey National, Bank of Scotland graphic
Will Lloyds TSB spoil the party?
The Abbey National is believed to be putting the finishing touches to a 25bn merger with Bank of Scotland - but the situation could be complicated by the entry of Lloyds TSB into the fray, according to newspaper reports.

Lloyds TSB is reported to be holding an unprecedented Sunday board meeting to consider a 20bn hostile bid for Abbey.

The Sunday Telegraph said Abbey and BoS had hoped to announce their deal on Monday but it is now expected to be made later in the week, possibly on Thursday.

The City has long been looking for a decisive move from Abbey, which is one of the UK's biggest mortgage lenders. When it first made a predatory move on BoS in November, its shares soared by 7%.

'Knockout' bid

The newspaper said Abbey had agreed to locate the enlarged group's head office in Edinburgh, with Abbey boss Ian Harley becoming chief executive and Peter Burt, BoS chief executive, becoming chairman.

It added Lloyds was watching the progress of the deal closely but was not expected to make a first move - rather it would be more be more likely to try to break up an agreed merger with "knockout" bid for Abbey.

Lloyds' boss Peter Ellwood was reportedly holding a "back me or sack me" board meeting on Sunday over plans for the hostile bid on Abbey.

The Mail on Sunday said he had summoned all of Lloyds' 15 directors for the unprecedented meeting at its Lombard Street headquarters.

If Lloyds were to pounce, the move would have to be confirmed to the London Stock Exchange on Monday morning, said the newspaper.

All three sides were today making no comment, describing the reports as "market speculation".

A Lloyds TSB spokeswoman told BBC News Online: "It is the policy of the group never to discuss when it is having a board meeting."

On the reported move for Abbey, she said: "We never comment on market speculation or rumour."

BoS 'vulnerable'

Abbey National made its move on BoS in early November, in a bid designed to create the UK's second biggest mortgage lender and seventh largest bank, with a combined value of 23bn.

But BoS poured cold water on the potential tie-up, branding a takeover deal as "unlikely".

BoS has been vulnerable since it failed to secure NatWest earlier this year after a fierce battle with arch-rival Royal Bank of Scotland.

Speculation about the possible consolidation in the banking sector helped push BoS's shares up by the close of trading on the London Stock Exchange on Friday, ending 3% ahead, or 19.5p up at 680p.

Abbey National, by comparison, was off a marginal 1.5p at 11.03.5, while Lloyds TSB was 1p stronger at 674p.

Search BBC News Online

Advanced search options
Launch console
See also:

23 Nov 00 | Scotland
BoS, Clydesdale in 'link-up talks'
05 Nov 00 | Scotland
Abbey seeks talks with BoS
03 Nov 00 | Business
BoS rejects Abbey National approach
03 Nov 00 | Business
Bank merger wave
07 Sep 00 | Business
Abbey takes out life insurance
07 Sep 00 | Business
Jobs go in 1.8bn takeover by Abbey
Internet links:

The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories