Lloyds TSB and HBOS: government could get 43 percent share

Lloyds TSB and HBOS confirmed their merger today and announced plans to raise a total of £17 billion in new capital by selling 2.6 million new shares at 173.3p each to existing shareholders.

Lloyds said that if the current shareholders do not take up the offer of the shares then the government will buy the rest of the shares. Separately, HBOS plans to raise £11.5 billion, with £3 billion coming through selling preference shares and £11.5 billion through new shares.

If the government does end up buying the shares they would then own 43 percent of the new super bank.

Lloyds also said that the due to credit-related write downs profits tumbled by £270 million in the first nine months. However Lloyds also reported that savings from the takeover of HBOS will be more than £1.5 billion.

The deal was arranged for the takeover of HBOS on October 31 at a price of £6.3 billion, once the takeover is complete the new merged Lloyds and HBOS will take 28 percent of the British mortgage market.

Source: Telegraph