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Wednesday, 2 May, 2001, 09:40 GMT 10:40 UK
Fifth force might help Lloyds deal
bank logos
BoS might be helping Lloyds get the deal it once wanted itself
The proposed merger of Halifax and Bank of Scotland might help Lloyds TSB's attempts to take over Abbey National, banking industry sources have said.

They said regulators might regard a combined Halifax/Bank of Scotland as a sufficiently large fifth force in UK banking to challenge the dominance of the main High Street banks - Barclays, HSBC, Lloyds TSB and Royal Bank of Scotland.

This might lessen competition concerns over the proposed Lloyds/Abbey deal and lead regulators to approve it, the sources said.

The Competition Commission on Wednesday said in a statement it was aware that Halifax and Bank of Scotland were in merger talks.

More time?

Banking sources said the commission might ask for more time to consider the Lloyds/Abbey merger in light of the recent moves by Halifax and Bank of Scotland.

At present, the commission has a 12 June deadline for submitting its findings to the government.

Lloyds/Abbey inquiry timeline
31 Jan: Lloyds issues details of Abbey takeover
23 Feb: Watchdogs refer merger to Competition Commission
30 Mar: Public hearing
Early Apr: Commission publishes initial findings
Late Apr: Ongoing talks with banks
12 Jun: Deadline for submitting findings to government
The commission also said that, in the event it found a combined Lloyds/Abbey was against the public interest, its proposed remedies remained unchanged.

These included prohibition of the merger, divestment of branches to competitors in areas where Lloyds/Abbey had a heavy presence or divestment of existing businesses such as Lloyds' mortgage business Cheltenham & Gloucester or Abbey's Cahoot online banking operation.

One third of accounts

Competition concerns over the deal centre on how much competition would be reduced by the ending of Abbey's independence.

A combined Lloyds/Abbey would be likely to create the UK's biggest retail bank, with about one third of current accounts.

The deal might also lead to hundreds of branch closures and thousands of job losses.

The final decision on whether the deal can proceed lies with the Department of Trade & Industry.

Abbey National had previously attempted to tie-up with Bank of Scotland but the moves were derailed by Lloyds TSB's intervention.

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See also:

01 May 01 | Business
Halifax upbeat on trade
30 Mar 01 | Business
Watchdog hears merger protests
06 Mar 01 | Business
Big banks 'operate monopoly'
23 Feb 01 | Business
Lloyds TSB bid under scrutiny
14 Feb 01 | Business
Abbey posts record profits
12 Dec 00 | Business
Abbey rebuffs new Lloyds TSB bid
14 Feb 01 | Business
The battle for Abbey National
25 Apr 01 | Business
Halifax and BoS discuss merger
25 Apr 01 | Business
Q&A: The Halifax - BoS merger
25 Apr 01 | Business
Bank of Scotland: Lucky at last?
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