Some investors in HBOS on Monday dismissed an attempt by two Scottish bankers to derail HBOS' merger with Lloyds TSB, as one of the pair said it was pursuing talks with the bank's shareholders.
By Myles Neligan
At the weekend the duo, George Mathewson and Peter Burt, proposed that they take temporary management control of HBOS and explore alternatives to the Lloyds TSB takeover.
Burt was chief executive of Bank of Scotland when it merged with Halifax to form HBOS in 2001. Mathewson was previously chief executive and then chairman of RBS.
Mathewson told Reuters on Monday that discussions with HBOS shareholders were planned in the days ahead, arguing that the Lloyds deal would restrict competition while closing off alternative options that could deliver more value to HBOS shareholders.
But three of HBOS' ten biggest shareholders, who asked not to be named, told Reuters that Mathewson and Burt's approach stood little chance of success.
"They don't stand a cat in hell's chance. There is absolutely no interest (in the proposal). This is entirely designed to pacify the Scottish lobby and show that they have tried. It's a joke," one of the investors said.
The Scottish pair need to win the support of 10 percent of HBOS investors to call an extraordinary general meeting to vote on their proposal.
GOING IT ALONE?
In September the government waived competition rules to facilitate Lloyds' takeover of HBOS, amid concerns at the time that HBOS could fail due to confidence-sapping falls in its share price.
The deal, in which HBOS investors would receive 0.605 Lloyds shares for every HBOS share they own, would create a lender controlling one quarter of the UK current accounts and 28 percent of the country's mortgage market.
Mathewson said the government's 37 billion pound bailout of the wider banking sector last month, which will see it take stakes in Royal Bank of Scotland as well as the combined Lloyds TSB-HBOS, had strengthened the case for keeping HBOS independent.
"Now they have the opportunity, because they've restructured all the banks, to treat HBOS the same as the others and not create this ridiculous monopoly," Mathewson told Reuters on Monday.
Unveiling their proposal to the HBOS board at the weekend, Mathewson and Burt said in a letter that the Treasury had indicated there was nothing to prevent HBOS from asking for government capital as a standalone bank.
"Recently and repeatedly the Chancellor and (the Treasury) have made it clear that (the government's) offer to provide new capital and funding support is available to any bank," the pair said in the letter.
Euan Stirling, an investment director at HBOS shareholder Standard Life Investments (SLI) said on Monday that SLI would listen to the Scottish ex-bankers.
"These two individuals have a wealth of experience in the industry and when they make proposals to you the most sensible thing to do is to listen," Stirling told BBC Radio Four.
HBOS formally rejected the Scottish bankers' approach on Sunday, informing them in a letter that their proposal "does not form the basis for any further discussion between us."
(Additional reporting by Raji Menon, Steve Slater, and Paul Hoskins; Editing by Sharon Lindores)
LONDON (Reuters)