Tweet
HBOS staff have been reassured they will experience little immediate change when their troubled employer is taken over by Lloyds TSB next week.
The assurance, in correspondence sent to HBOS employees last week, comes as integration of the two banks moved a step closer today with the taxpayer taking a near 44% stake in the combined group.
There has been widespread speculation of heavy job losses once the deal goes through but no details of the cutbacks have yet been given. The combined bank will employ around 140,000 staff and have 3,000 branches in the UK, more than any other British bank.
Correspondence sent to HBOS employees last week insists they were will be "no major changes for the vast majority" of them when the new bank officially begins operating a week today.
After a capital injection of £17bn into the two banks, the taxpayer now has the right to appoint two non-executive directors to the board of what will be known as Lloyds Banking Group.
Both banks, which retain their separate stockmarket listings for a few more days, admitted today that their existing shareholders had shunned the cash calls they were forced to embark upon in October when the government unveiled its plan to bailout the banking system.
HBOS, which had been trying to raise £8.5bn by selling 7.5bn shares to existing shareholders at 113.6p a share, admitted just 0.24% of its shareholders had taken up the offer. The unwanted shares will be bought by the government, which is also buying £3bn of preference shares
Lloyds TSB, which agreed to takeover HBOS before the industry-wide bail-out was announced in a rescue orchestrated by Gordon Brown, is issuing 2.6bn new shares at 173.3p a share to raise £4.5bn. But it admitted today that the taxpayer will end up owning almost all the new shares after just 0.5% of its shareholders participated in the rights issue. That will leave the taxpayer with a 43.4% stake in the combined group.
The injection of capital by the government prohibits HBOS directors from receiving any cash bonus for 2008 and Lloyds TSB directors will receive any bonus they are entitled to in shares. The terms of the bail-out also state there will be no rewards for failure: "Where a board member loses the confidence of the board, they should be able to be dismissed at a cost that is reasonable and perceived as fair."
HBOS's chief executive, Andy Hornby, who is staying on for a few months at the combined group on a consultancy basis, has said he will forgo any contractual entitlement to pay off, but there is no confirmation of any final pay packets for the rest of the HBOS board – none of whom were offered similar positions on the board of the new Lloyds bank.
The asset management and insurance operations – which operate under the Insight, Clerical Medical and Scottish Widows brands – will not be integrated immediately.
guardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds
More...
