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Lloyds TSB Poised to Sabotage Bank of Scotland's Merger with Abbey National

Strategic Insights

— 1 min read

Lloyds TSB, seeking to outmaneuver Bank of Scotland, is reportedly prepared to disrupt an agreed merger between Abbey National and Bank of Scotland, with a potential #20bn hostile bid for Abbey. This move would mirror Bank of Scotland's failed attempt to acquire NatWest through a hostile bid. The carefully crafted deal between Abbey National and Bank of Scotland could be upset, with Abbey's boss Ian Harley set to become the chief executive of the enlarged group and Peter Burt, Bank of Scotland's chief executive, becoming chairman.

Key Takeaways:

  • Lloyds TSB is considering a #20bn hostile bid for Abbey National to disrupt the agreed merger with Bank of Scotland.
  • The move would mirror Bank of Scotland's failed attempt to acquire NatWest through a hostile bid.
  • Abbey National and Bank of Scotland were reportedly close to announcing an agreed merger, with Abbey's head office set to be located in Edinburgh.
  • Peter Ellwood, chief executive of Lloyds TSB, summoned all 15 directors for a special board meeting to discuss the bid.
  • The bid is a "knockout" attempt to break up the agreed merger between Bank of Scotland and Abbey National.
  • The merger between Abbey National and Bank of Scotland would have created the UK's second-biggest mortgage lender and seventh-largest bank, with a combined value of #23bn.
  • Ian Harley, Abbey's boss, is set to become the chief executive of the enlarged group, while Peter Burt, Bank of Scotland's chief executive, would become chairman.
  • Lloyds TSB, Abbey National, and Bank of Scotland refused to comment on the reports, describing them as market speculation.
  • Abbey National's shares lifted 7% upon news of the potential tie-up, while Bank of Scotland's shares closed 3% up at 680p.
  • The City has long been waiting for Abbey to make a decisive move in the market.

Statistics:

  • Lloyds TSB's potential bid for Abbey National is valued at #20bn.
  • The merger between Abbey National and Bank of Scotland would have created a combined entity worth #23bn.
  • Abbey National's shares lifted 7% upon news of the potential tie-up.
  • Bank of Scotland's shares closed 3% up at 680p.
  • Abbey National was off a marginal 1.5p at 1103.5p on Friday.
  • Lloyds TSB was 1p stronger at 674p on Friday.

Sources:

  • Financial Times: [1]
  • The Times: [2]
  • City Am: [3]

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