Page last updated at 21:32 GMT, Wednesday, 17 September 2008 22:32 UK

Salmond attacks financial 'spivs'

hbos hq in edinburgh
HBOS employs about 17,000 people in Scotland

Scotland's first minister has launched an outspoken attack on the "spivs and speculators" he blames for targeting Scottish-based bank HBOS.

Alex Salmond told BBC Scotland that HBOS was soundly based - and that financial regulators should have acted to forestall the speculative attack.

HBOS has agreed a merger with Lloyds TSB after its share price plummeted.

The group, formed from a merger of Halifax and Bank of Scotland in 2001, has about 17,000 employees in Scotland.

HBOS has 320 branches in Scotland and the group's headquarters are in Edinburgh.

Lloyds TSB has about 7,200 staff in Scotland.

The Unite union said the merger talks had left the two banking groups' combined 24,000 staff in Scotland fearing for their jobs.

It warned it would not accept any compulsory redundancies if the proposed merger goes ahead, and urged both banking groups to take a "socially responsible approach" to the deal.

Mr Salmond praised both HBOS and Lloyds TSB, but said any merger between the two should be based on measured discussion, not a "shotgun marriage" driven by unwarranted speculation.

Alex Salmond blames 'spivs and speculators' for targeting HBOS

And he accused financial regulators the Financial Services Authority of leaving HBOS vulnerable to speculative attack by failing to act despite finding the banking giant was properly funded and had a good capital ratio.

"I am very angry that we can have a situation where a bank can be forced into a merger by basically a bunch of short-selling spivs and speculators in the financial markets," he said.

"We should not have situations where well capitalised, properly funded financial institutions are subject to incredible speculative attack, and that drives them into decision making which they otherwise might not have done.

"You have got to put the hems on that sort of activity, otherwise we will have a succession of companies going through the same process. All financial regulators have got to wake up to where we are at the present moment."

Mr Salmond has cancelled a business trip to the United States. He had been due to fly to there on Friday, to attend the Ryder Cup and encourage investment from US firms.

But he has decided to remain in Scotland to lobby for the retention of banking jobs and headquarters functions.

HBOS customers give their views about the bank and the merger talks

The Liberal Democrats' Scottish leader, Tavish Scott, said: "The enormous short-term financial pressures have understandably led to these talks.

"But customers need to know that banking regulators are on their side because a merger of these two will mean less competition."

Tory finance spokesman Derek Brownlee said the continued success of Scotland's financial sector was crucial to its long term economic prospects.

"Whatever the outcome of these merger talks, we want to see Scotland maintain a strong and stable presence in the global financial sector," he said.

Ken Murray, of Blue Planet Investment Management, said: "A perceived weakness in HBOS was its reliance on wholesale funding - although in reality that was not the weakness it was made out to be in the press.

"That has made the bank, I suspect, receptive to an approach from Lloyds TSB because they can see that the combined entity makes a lot more sense than the two separate entities."

HBOS has about 1,100 branches and employs 65,000 people across the UK, with a further 10,000 based abroad.

Lloyds TSB has 70,000 staff in the UK and a total of 1,900 branches, including 160 under the Cheltenham and Gloucester banner.


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