HBOS comprises Halifax, Bank of Scotland, Intelligent Finance, BM Solutions and The Mortgage Business among other companies, while Lloyds counts Cheltenham and Gloucester and Scottish Widows in its portfolio.
The acquisition occurred after HBOS’s share price plummeted as investors attacked the company. Confidence fell in spite of assurances from the bank and the authorities that is was in good financial health.
The acquisition has created the UK’s largest mortgage lender, with the combined group responsible for around a third of all mortgages in the country. It’s also one of the biggest savings banks now. Customers of either bank should see little change initially, as products will remain the same for now. If you have a mortgage or savings with either organisation, you need do nothing at the moment.
At the time of press date, there had been no announcement as to how the two organisations will work long term, and whether the banks will retain separate identities.
In a normal market, this deal would have come to the attention of the competition authorities, and may have been barred on the basis it creates a lender with too large a share of the mortgage market. However, the government has waived this one through in order to instil confidence in the British banking system. Concerns still remain, however, that this will reduce competition in the mortgage market.
“Between the two giants of British Banking they control six major mortgage brands – Lloyds, Cheltenham & Gloucester, Halifax, Bank of Scotland, BM Solutions and Intelligent Finance,” said Louise Cuming, head of mortgages at moneysupermarket.com. “We need to wait and see how many of these survive the merger. Obviously if some of these disappear, customer choice and competition will be eroded, which can only be to the detriment of borrowers.
“Lloyds have always run a very conservative ship and I have no doubt the merged operation will have a diminished appetite for higher risk specialist lending. This could leave borrowers without a squeaky clean credit rating or a large deposit without a hope of being accepted by the new super bank’. Therefore, the slightly riskier part of the housing market populated by first time buyers and sub prime borrowers is set to stagnate even further, which won’t be good for the market as a whole.
