The London lender said the union with Edinburgh, Scotland-based HBOS could deliver pretax annual cost savings of over £1.5 billion ($2.4 billion) by 2011, up from its September estimate of more than £1 billion. It made the forecast as it published documentation for the planned takeover -- which was worth £6.5 billion as of Friday's close -- and for a government-backed share issue to raise £5.5 billion.
In a letter to shareholders Lloyds TSB chairman Victor Blank said the enlarged bank, to be called Lloyds Banking Group plc, hopes to redeem the government's £4 billion of preference shares in 2009 and resume dividend payments. The preference shares carry a coupon of 12%. In return for the government's purchase of the shares, the merger partners had agreed to suspend dividend payments. - Laura Board
Lloyds TSB Group plc Monday raised the forecasted savings from its takeover of HBOS plc and pledged to redeem government debt in the enlarged group next year following reports that a rival bidder for HBOS was circling.
