Britain's biggest mortgage lender Halifax and Bank of Scotland agreed terms for a £28 billion sterling (€45 billion) merger yesterday to create the UK's fifth largest bank.
The deal marks a fresh round of consolidation in Britain's banking sector, and is effectively a £10.2 billion takeover of Bank of Scotland by Halifax. Its executives will take the two top jobs and its shareholders will own about 63 percent of the combined group.
The move is likely to help Lloyds TSB in its bid to take over Abbey National because it creates a new challenger to the UK's big four banks. The merger is on a nil-premium basis, with shareholders in the two banks receiving one share in the enlarged group for each share they currently hold.
Around 2,000 jobs will go over three years, but Bank of Scotland's chief executive Mr Peter Burt ruled out a significant number of compulsory redundancies. The bank's headquarters will be in Edinburgh, where Bank of Scotland is based. The bank, to be known as HBOS, will be chaired by Halifax chairman Lord Stevenson, with Mr Burt becoming executive deputy chairman and Halifax's chief executive Mr James Crosby assuming that role in the new entity. Mr Burt will oversee the integration and then step back to become part-time deputy chairman until 2004.
He said the original plan had been for him to be chief executive, but he had decided that as he was 57, it made more sense for Mr Crosby to move straight into the chief executive's job.
