The planned merger between Lloyds TSB and HBOS now appears to be in the process of being renegotiated whilst a merger between two large mutuals namely the Britannia Building Society and Co-operative Financial Services appears to be on.
It appears that Lloyds TSB are looking to change the terms of the merger given the large fall in the share price of HBOS compared to when the deal was initially agreed.
The collapse of the Lloyds TSB and HBOS deal would not be unexpected given that when the deal was first agreed HBOS was facing problems in trying to persuade other banks to lend it money and the UK government were happy for Lloyds TSB to come to its rescue even though there were likely to be competition issues.
The news last week that the UK government were effectively going to guarantee any loans made to the major banks means that there is no longer the requirement for HBOS to enter the deal as any banks who lend it money should be confident that their money is safe.
If the deal did collapse it will be seen as good news for the UK consumer as there will be more competition in the banking sector and it will be good news for the staff of HBOS many of whom would surely have lost their jobs as part of the merger.
Moving on to the news that the Britannia and the Co-op could merge would create a mutual with over 6 million customers. Both the Britannia and the Co-op are in strong financial positions but the merger would allow them to compete with other financial institutions better.It is unclear at this stage if the mutual merger went ahead if there would be any windfall payments for members.
Sunday, October 12, 2008
Tuesday, October 07, 2008
Panic Monday
The panic on the financial markets was of monumental proportion and ended up with the the FTSE 100 experiencing its biggest one day fall ever. That is quite some feat given that it is worse than Black Monday back in October 1987 and worse than the the impact made by the September 11 attacks.
Yesterday was all meant to be so different. The passing of a bill in the US on Friday to allow the US Treasury to pump hundreds of billions of dollars into the finance system was expected to rescue the world from the credit crunch and recent financial crisis.
However, the announcement of the failure to do a deal involving the stricken German lender Hypo Real Estate, the alleged announcement of the German government to guarantee 100% all its banks deposits, together with the crisis in Iceland where the government has passed emergency powers and called on its large financial institutions including pension schemes to sell investments abroad and bring the money back to Iceland.
So here we sit unsure whether yesterday was the bottom or if there will be worse to come. Until the panic subsides then people will continue to distrust others and look to sell anything with value before it loses more value. Hopefully, as the number of paniced sellers diminishes a number of experienced long term investors will enter the fray and buy shares at these knockdown values. Unfortunately nobody knows when this will happen, it could be today, tomorrow or next year unless of course we are heading for some sort of financial armageddon!
Yesterday was all meant to be so different. The passing of a bill in the US on Friday to allow the US Treasury to pump hundreds of billions of dollars into the finance system was expected to rescue the world from the credit crunch and recent financial crisis.
However, the announcement of the failure to do a deal involving the stricken German lender Hypo Real Estate, the alleged announcement of the German government to guarantee 100% all its banks deposits, together with the crisis in Iceland where the government has passed emergency powers and called on its large financial institutions including pension schemes to sell investments abroad and bring the money back to Iceland.
So here we sit unsure whether yesterday was the bottom or if there will be worse to come. Until the panic subsides then people will continue to distrust others and look to sell anything with value before it loses more value. Hopefully, as the number of paniced sellers diminishes a number of experienced long term investors will enter the fray and buy shares at these knockdown values. Unfortunately nobody knows when this will happen, it could be today, tomorrow or next year unless of course we are heading for some sort of financial armageddon!
Wednesday, October 01, 2008
Increased savings protection
It is becoming increasingly likely that the UK government will increase the protection limit given to savers from £35,000 to £50,000. The increase is felt necessary to try and calm concerns that savers may have about the security of their cash.
The move comes on the back of the Irish governments decision to guarantee the safety of all savings in 6 of its main financial institutions for the next 2 years. This is seen by some in both the UK and Europe as giving the Irish institutions an unfair advantage over other financial companies in other countries.
The move comes on the back of the Irish governments decision to guarantee the safety of all savings in 6 of its main financial institutions for the next 2 years. This is seen by some in both the UK and Europe as giving the Irish institutions an unfair advantage over other financial companies in other countries.
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