Page last updated at 11:10 GMT, Monday, 22 September 2008 12:10 UK

HBOS chief defends takeover deal

Andy Hornby wrote an e-mail to staff about the takeover
Andy Hornby wrote an e-mail to staff about the takeover

HBOS chief executive Andy Hornby has said agreeing to the bank's takeover by Lloyds TSB was "the right thing to do".

Mr Hornby wrote an e-mail to all the bank's staff in the wake of last week's "momentous developments" and "unprecedented turmoil".

While admitting the merger would lead to job losses, he insisted that most people would be able to stay within the enlarged group.

He said changes brought about by integration could take two years.

Lloyds TSB announced last week it had agreed a 12.2bn takeover after shares in Edinburgh-based HBOS plummeted.

HBOS, formed from a merger of Halifax and the Bank of Scotland seven years ago, has about 17,000 staff in Scotland, while Lloyds TSB has more than 7,000 employees.

In his letter, Mr Hornby said that he had been in talks with Eric Daniels, the chief executive of Lloyds TSB, for some time.

He said: "We have always recognised the benefits of combining these two businesses with their fantastic collection of brands.

"Those talks really accelerated, however, after the momentous developments in the last few days as the world has experienced literally unprecedented turmoil in financial markets."

Possible impact

Mr Hornby added: "We agreed to be purchased by Lloyds TSB because it is the right thing to do.

"It really is as simple as that.

"We had reached a point where the dramatic movements in our share price (caused by the completely unprecedented market context) were raising concerns amongst our customers."

He said that HBOS was an "exceptionally well capitalised and profitable bank" but share price gyrations were causing "too much uncertainty".

Lloyds TSB has dismissed claims that up to 40,000 posts could be lost in the UK but has refused to rule out compulsory redundancies.

Mr Hornby said: "I know that many of you are naturally concerned about your job and the possible impact of the deal on you and your family.

"Rest assured that we will do everything we can to end the uncertainty for you as soon as we can.

"Please remember though that the deal has just been announced so there is a lot of work to be done in the next few months."

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