HBOS Share holders get rough deal in Lloyds TSB Merger

Once Lloyds TSB take over HBOS the “super bank” will dominate high street lending and mortgage loans, moreover, with the Governments £17 billion cash injection into the two lenders this will mean that the British tax payer will end up with a stake of almost 43.5 percent in the merged bank.

HBOS announced yesterday that it will scrap all cash bonuses this year after the cash injection was announced by the government. Once the takeover is complete both the Chairman Dennis Stevenson and the Chief Executive Andy Hornby will leave the firm. Both have surrendered their salary and bonus payouts and according to HBOS Mr Hornby was entitled to around £2 million.

However Lloyds TSB’s chief executive Eric Daniels said that he would not pay executives bonuses in cash this year but instead in shares, he also said that the remuneration policy at the merged group would prioritise long-term value and would not pay out “rewards for failure”.

Due to the financial crisis and the declining share value in HBOS, Lloyds TSB cut its offer by 27 percent saying it could no longer recommend the deal to shareholders in its previously agreed format. HBOS shareholders will now receive 0.605 Lloyds TSB shares for each of their HBOS shares, the offer before was for 0.83 Lloyds TSB shares to each HBOS shares.

Source: timesonline