The banks confirmed Wednesday they are discussing an offer from Lloyds TSB for HBOS. Although Lloyds TSB is far smaller than HBOS by most measures, its market cap exceeds its peer's following a collapse in HBOS' share price.
After Lehman Brothers Holdings Inc.'s bankruptcy filing Monday, fears about HBOS' dependence on wholesale funding, and its exposure to the U.K. and U.S housing markets, drove down its stock. The bank's shares closed down almost 22% on Tuesday and 17% on Monday. After Lehman's bankruptcy filing Monday, most analysts were quick to identify HBOS, along with Barclays plc and Royal Bank of Scotland Group plc, as among the most vulnerable banks, and short-selling by hedge funds accentuated the share-price decline. - Neil Sen
See TheDeal.com: HBOS in takeover talks with Lloyds TSB
The global credit crisis is prompting U.K. lenders HBOS plc and Lloyds TSB Group plc to seriously discuss a possible merger.
