Page last updated at 17:49 GMT, Thursday, 30 October 2008

MSPs warn against bank takeover

HBOS

The Scottish Parliament has delivered a warning against the proposed takeover of HBOS by Lloyds TSB.

MSPs backed a motion at Holyrood calling for the Edinburgh-based bank to stay independent by gaining access to the UK Government's bank bailout fund.

But the Tories said the takeover should be decided by shareholders at the two banks, not politicians.

Chancellor Alistair Darling indicated he would consider bailing out HBOS, even if the takeover fell through.

Scottish Liberal Democrat leader Tavish Scott, who brought the motion forward, said the circumstances surrounding the proposed 12.2bn HBOS takeover had changed in the wake of the UK Government's 37bn banking bailout.

"The UK Government must now sit up and listen to the will of parliament," he said, after MSPs backed the motion by 61 votes to 40.

We do not believe politicians should interfere in the commercial decisions taken by financial institutions and their shareholders
Derek Brownlee
Scottish Conservatives

"Ministers must step in and use the taxpayers' billions to secure the long term future of HBOS and the Scottish financial industry."

In a letter to the Scottish Government, Mr Darling said the Financial Services Authority watchdog would reassess the recapitalisation needs of both banks, should the takeover not happen.

Finance Secretary John Swinney said the letter "made clear" there were other opportunities, adding: "We will continue to have dialogue with the chancellor to ensure these propositions are fully and properly considered by the United Kingdom Government."

He said it was the Scottish Government's duty to protect the country's best interest by maintaining HBOS as an independent body as a way to save jobs and headquarter functions in Edinburgh.

Tory finance spokesman Derek Brownlee said everyone was keen to ensure the best outcome for Scotland if the takeover went ahead - but warned: "We do not believe that politicians should interfere in the commercial decisions taken by financial institutions and their shareholders unless there is no other option."

'Titanic hug'

John Park, Labour's economy spokesman, said he personally knew many workers who could be affected by the move, adding: "Many of these jobs are part time, flexible and relatively well paid.

"In particular they provide a level of flexible working that has greatly improved standards of living across Scotland."

Green MSP Patrick Harvie said debating the HBOS takeover without addressing the fundamental causes of economic trouble was "pointless".

"It amounts to little more than a group hug on the deck of the Titanic," he said.

Meanwhile, the proposed takeover came up at first minister's questions, when deputy Labour leader Johann Lamont accused Alex Salmond of failing to secure guarantees during his talks with Lloyds TSB bosses this week.

Mr Salmond replied that he could not say Lloyds TSB gave undertakings.

"The argument being put forward by Lloyds TSB is that until they go through the merger process, until the merger is completed, they are not in a position to look at the organisational structure of any merged organisation," he told MSPs.

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SEE ALSO
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UK banks receive 37bn bail-out
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