Page last updated at 08:59 GMT, Sunday, 21 September 2008 09:59 UK

Former rival mourns bank takeover

By Jamie McIvor
BBC Scotland business reporter

The man who led the Royal Bank of Scotland's transformation into a global giant says the takeover of its historic rival Halifax Bank of Scotland (HBOS) by Lloyds TSB will be bad for competition.

Sir George Mathewson described the loss of HBOS as an independent company as "very sad" and warned this would be damaging to Scotland's position as a financial centre.

Sir George was the Royal Bank's chief executive from 1992 until 2001. During his time, RBS bought the National Westminster Bank and became the first Scottish company to make a profit of more than 1bn.

Sir George Mathewson
Sir George was the Royal Bank's chief executive from 1992 until 2001
Speaking to The Business programme on BBC Radio Scotland, Sir George said: "Much as I have spent many years in fierce competition with the Bank of Scotland, I deeply regret effectively its passing as an independent company."

He added: "It's difficult to see how it cannot be very damaging to Edinburgh and to Scotland, to Scotland's position as a financial centre and basically in terms of the serious jobs lost within the city and all that follows on from that in terms of houses, critical mass etc.

"It's the fact there are decision-makers located in Scotland, it's the part in the life of the city and in the contribution to everything, government etc. I think that's a great loss to the Scottish infrastructure."

Sir George also feared the combination of HBOS and Lloyds TSB would prove to be bad for the public. The two companies have 38 million customers between them.

He said: "How bad is a question mark but you have to stand and say, in general, when you lose big players who are satisfying the market, it's not a good thing."

'Ridiculous claims'

Lloyds TSB struck a 12bn deal to buy HBOS on Thursday. HBOS shareholders will get 2.32 a share. This means shareholders who took up extra shares in a rights issue earlier this year will have lost out.

The companies have still not said how many jobs will go, although claims by unions that up to 40,000 jobs will be lost have been dismissed as "ridiculous".

There are also concerns about possible branch closures. In Scotland alone, Bank of Scotland has more than 300 branches while Lloyds TSB has 185.

HBOS headquarters on The Mound in Edinburgh
The companies plan to keep Bank of Scotland's headquarters in Edinburgh

However the companies have said the Bank of Scotland's separate banknotes and historic headquarters on The Mound in Edinburgh will remain.

HBOS shares have fallen in value by more than 80% over the past year.

Its share price collapsed at the start of last week and as late as Tuesday, HBOS was reassuring investors and customers that its financing was sound.

Some have blamed the collapse of the share price on short-selling - a practice whereby traders make money by betting on falls in share prices.

First Minister Alex Salmond described the people who brought about the fall in HBOS' share price as "spivs and speculators".

The Financial Services Authority has now temporarily banned the short-selling of stocks in leading financial companies. However others argue that HBOS had been pursuing a flawed strategy and that short-selling was only partly to blame.




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


FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

BBC iD

Sign in

BBC navigation

Copyright © 2019 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific