Lloyds TSB and HBOS: deal could be over

HBOS and Lloyds TSB share prices took a hammering yesterday leading to new doubt as to if the takeover of HBOS will go ahead with analysts suggesting that the government may have to step in to help HBOS.

Both Lloyds TSB and HBOS share holders sold their shares frantically yesterday with the part nationalization of the banks becoming a huge threat to the share prices and dividends.

On London’s FTSE 100 index Lloyds TSB was the biggest faller loosing 151.3p or 6.6 percent, with HBOS also closing last night at a loss of 5 percent to 85.3. Both banks struggled whilst the rest of the stock market showed strength as hopes of the stabilization in the financial system grew stronger.
The government has denied reports that they are planning to step in nationalize HBOS if the deal between Lloyds TSB and HBOS fails.

We could see another day of frantic share selling today as one of the conditions on the government cash injection is that no dividends are paid until the government has been paid back; some market observers say this could be years.

Source: telegraph