Last-ditch HBOS challenge fails

The sale of HBOS has faced repeated attempts to block it

Lloyds TSB's takeover of HBOS has cleared its final hurdle after a judge in Edinburgh approved the legal arrangements to create the super-bank.

A petition had been lodged with the Court of Session questioning the Scheme of Arrangement - a legal process whereby one company takes over another.

The last-minute intervention was filed by financial journalist Ian Fraser and economist Robert McDowell.

But after a day-long hearing Lord Glennie granted the orders HBOS sought.

'Extraordinary deal'

Mr McDowell said his motive in bringing the questions to the court was not to disrupt or upset the takeover, but to look at it as an example for the future.

He told the court: "I would remind us all of the extraordinary nature of this scheme and general meeting that we are considering, dealing as it does with the takeover of a leading Scottish bank, a national champion, a major part of the financial heights of the economy."

One of the questions raised was about the decision to hold an HBOS meeting where shareholders voted on the takeover in Birmingham, rather than Scotland.

But David Stellar QC, who was representing HBOS, said it had been the company's practice to change the location of its meetings since 2001 and a substantial amount of its shareholders were in southern England.

Banking group

The court was told that of 650,000 shareholdings in the bank, only 52,000 were in Scotland.

There have been repeated attempts to block the sale of HBOS. The last of these, threatened by HBOS pensioners, has now been withdrawn.

The UK Government's injection of £17bn of capital is now expected to be confirmed and the new Lloyd's banking group could start trading as early as next week.

No sudden changes are expected in branding or branch closures but the plan is for a cut of £1.5bn from the new bank's annual costs over the next three years, which has prompted predictions of a large number of job losses.