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Thursday, 3 May, 2001, 16:23 GMT 17:23 UK
Halifax and BoS rush to the altar

Just one week after Bank of Scotland and Halifax confirmed that they were discussing a merger, an agreement could be reached soon. BBC business editor Jeff Randall explains the reasons for the rush.

The arrival of a "fifth force" in British banking is edging nearer, following Wednesday's postponement of Bank of Scotland's annual results meeting.

Profile - Halifax
Founded in 1852
Demutualised in 1997
Stockmarket value: 17.6bn (1 May)
Employees: 37,000
Pre-tax profit last year: 1.89bn (+8%)
The delay signals BoS's determination to thrash out final details with its proposed partner, Halifax.

With a deal so close, it would have been almost impossible for BoS's board to answer questions from shareholders, who inevitably would have been more interested in the link with Halifax than last year's figures.

The plan now is for BoS to announce its results - expected pre-tax profits of 1bn - along with a sealing of the Halifax merger, perhaps as early as Friday.

Hurdles taken

Profile - Bank of Scotland
Founded in 1695
Stockmarket value: 10.35bn (1 May)
Employees: 20,000
Pre-tax profit Mar - Aug 2000: 535m (+14%)
Aside from number-crunching on issues such as tax, most of the serious hurdles have been jumped by both banks' managements.

The combined company will be headquartered in Edinburgh, with a significant operation retained in Halifax for the retail banking and mortgage businesses.

The new chairman is likely to be Lord Stevenson, currently in the chair at Halifax, with BoS's chief executive Peter Burt taking over that role at the amalgamated group.

Name games

What has not been decided is the new name for the merged holding company.

Given the strength of each bank's brand with existing customers, it seems certain they will be kept for trading purposes, in the same way that National Westminster retains a very significant high-street presence, even though it was taken over by Royal Bank of Scotland.

But what will be above the head-office door and what will the quoted entity trade as on the London Stock Exchange?

There is, of course, considerable pride attached to both companies, each with an illustrious history. Killing off one of the two names will cause much grief in either Edinburgh or Yorkshire.

So can there be a compromise?

An American-style combination of the two - the Bank of Scotland & Halifax - seems excessively unwieldy.

More likely is a jazzy contraction, along the lines of Halbos or Haliscot.

This matter is not as trivial as it may seem, because it is bound to have an impact on marketing, advertising slogans and logos.

Bank holiday wedding

Fearing that a third party could bust up the deal by launching a hostile bid for either BoS or Halifax, both banks are working round the clock to formalise their bank-holiday wedding.

BoS's Peter Burt remembers only too well that he was left standing at the altar, after NatWest was snatched from his grasp by a rival bid from Royal.

He's determined that will not happen again.

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See also:

01 May 01 | Business
Halifax upbeat on trade
29 Apr 01 | Business
G10 warns over bank mega-mergers
25 Apr 01 | Business
Halifax and BoS discuss merger
25 Apr 01 | Business
Q&A: The Halifax - BoS merger
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