The chief executive of HBOS has sent an email to staff defended his company's dramatic takeover by Lloyds TSB, telling them: "It was the right thing to do."
The chief executive of HBOS has sent an email to staff defended his company's dramatic takeover by Lloyds TSB, telling them: "It was the right thing to do."
Andy Hornby said the two institutions had been talking for some time about a deal, and claimed it would create "a financial powerhouse".
Mr Hornby also said it could take at least three months to complete the deal - and up to three years to integrate the two institutions.
His comments came in the email written yesterday, which also sought to reassure staff over jobs at the Edinburgh-based bank, which is made up of the old Bank of Scotland and Halifax businessses.
"It is of course the case that the merger will inevitably lead to some job reductions," he said in the email, obtained by The Herald.
"However, the majority of HBOS colleagues are likely to stay with the enlarged group, reflecting the sheer scale of our business.
"Moreover, for most colleagues the impact of the merger is unlikely to be immediate as integration will take at least two to three years to complete."
Mr Hornby told his HBOS staff: "Eric Daniels, chief executive at Lloyds TSB, and I had been talking for a while about the deal.
"We have always recognised the benefits of combining these two businesses with their fantastic collection of brands.
"Those talks really accelerated, however, after the momentous developments in the last few days as the world has experienced literally unprecedented turmoil in financial markets."
When UK financial stocks came under even more intense pressure last week, the two men moved quickly to "complete the conversations" between the two companies.
"We agreed to be purchased by Lloyds TSB because it is the right thing to do," he said.
"It really is as simple as that.
"We had reached a point where the dramatic movements in our share price (caused by the completely unprecedented market context) were raising concerns amongst our customers.
"The simple truth is that I - and the rest of the HBOS board - were simply not prepared to take any risks with our great business."
Despite being an "exceptionally well capitalised and profitable" bank, share price gyrations caused too much uncertainty and it was time to act decisively to ensure long term stability for staff and customers, he said.
"The deal with Lloyds TSB is about two things," he went on.
"Firstly, getting the best possible deal for our shareholders, including the many of you who have HBOS shares.
"The new company will be a financial powerhouse. HBOS shareholders will share in its success - they will own 44% of it. All of us who are shareholders will participate in the success of the business going forward.
"Secondly, protecting and growing our franchise. Together with Lloyds TSB we will enjoy an extraordinarily strong position in retail banking, corporate banking and insurance & investment.
"The reality is that, as part of a bigger franchise, we will be able to grow the business more than we could have as a standalone HBOS."
