Shareholders in Halifax Bank of Scotland (HBOS) today agreed to the bank's merger with Lloyds TSB in a move that paves the way for the creation of the UK's first 'superbank'.
A total of 84% of shareholders voted in favour of the deal, which will create a merged entity called Lloyds Banking Group that boasts 3,000 branches and around 145,000 employees. The deal also received 98% share capital backing.
It follows the 96% majority vote in favour of the proposal by Lloyds shareholders on 19 November and company chairman, Sir Victor Blank, today praised the HBOS voters for agreeing to what he calls a "compelling business opportunity".
The result helped level-out HBOS's share value on Friday, although the bank is still nursing a near 20% loss. Lloyds TSB, meanwhile, has climbed marginally since midday but is currently down more than 17%, or 27.5p, to 130.5p.
Lloyds says it is now in a position to proceed with the placing and open offer announced on 13 October, which entitles shareholders to buy 0.43 open offer stocks for every one ordinary share held at 173.3p per share.
Eric Daniels, Lloyds group chief executive, says: "We are very pleased that HBOS shareholders have given a strong vote of confidence for the proposed acquisition, and that they will be in a position to share in the benefits as we create the UK's leading financial institution.
"I believe the enlarged Group will help to bring stability to the financial services sector, ensure strong competition and create greater value for both sets of shareholders."
HBOS had earlier published a trading update highlighting the "increasingly difficult" trading conditions and admitting its net interest margins were coming under pressure.
The firm acknowledged since its interim management statement at the start of November, there had been an acceleration in the deterioration in credit quality and further sharp falls in estimated asset values.
It blamed the large cuts in Bank base rate for the pressure now building on its net interest margins, but confirmed deposit flows have improved over the last month.
The bank also revealed it expects to accrue a charge of around £200m in 2008 in respect of the Financial Services Compensation Scheme (FSCS) levy.
The statement concludes: "Through the injection of capital and liquidity facilitated by the UK Government, both currently and going forward, HBoS remains confident in its ability to navigate through this difficult period, as it becomes part of the enlarged Lloyds Banking Group."
An attempt by the Merger Action Group to halt the merger was dismissed yesterday.IFAonline
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