HBOS
2008/9 Schools Wikipedia Selection. Related subjects: Companies
 |
|
| Type | Public (LSE: HBOS) |
|---|---|
| Founded | 2001 |
| Headquarters | Edinburgh, Scotland, UK |
| Key people | Dennis Stevenson, Chairman Andy Hornby, CEO |
| Industry | Finance and Insurance |
| Products | Financial Services |
| Revenue | £21,291 million (2007) |
| Operating income | £5,149 million (2007) |
| Profit | £4,109 million (2007) |
| Employees | 72,000 |
| Website | www.hbosplc.com |
HBOS plc (LSE: HBOS) is a banking and insurance group in the United Kingdom, the holding company for Bank of Scotland plc, which operates the Bank of Scotland and the Halifax bank; HBOS Australia, owner of BankWest; and HBOS Insurance & Investment Group Limited, the group's insurance division. Although officially HBOS is not an abbreviation with any intrinsic meaning, it is widely recognised as an initialism for Halifax Bank of Scotland. The corporate headquarters of the group are in Edinburgh, Scotland; the old head office of the Bank of Scotland. Operational headquarters are based in Halifax, West Yorkshire, England; the old head office of Halifax.
HBOS was formed by the merger of Halifax plc and the Governor and Company of the Bank of Scotland, and the formation of HBOS was heralded as creating a fifth force in British banking as it created a company of comparable size and stature to the established Big Four UK retail banks. It is also the UK’s largest mortgage lender. HBOS is a public limited company listed on the London Stock Exchange. A reorganisation of the group initiated by the HBOS Group Reorganisation Act 2006 saw the transfer of Halifax plc to the Governor and Company of the Bank of Scotland, which was now a registered public limited company, Bank of Scotland plc.
On 18 September 2008, Lloyds TSB plc officially announced a confirmed agreement to take over HBOS plc in a deal worth £12.2 billion (US$21.85-billion). Lloyds stated that it would continue to use ' The Mound' as the headquarters for its Scottish operations and would continue the issue of Scottish bank notes.
History
Formation
The Bank of Scotland is the UK's oldest commercial bank, by an Act of the Parliament of Scotland in 1695. Halifax was founded in 1853 as the Halifax Permanent Benefit Building and Investment Society, which demutualised in 1997 to become a public limited company (plc).
The merger of the Bank of Scotland and Halifax occurred in 2001 during a wave of consolidation in the UK banking market which began in the late 1990s. The Bank of Scotland played a key role in the process, firstly by launching a hostile takeover bid for NatWest, although the bid failed to a rival offer from the Royal Bank of Scotland. It later investigated a merger with Abbey National, when Halifax approached with an offer to merge.
The merger created the fifth largest bank in the UK by market capitalisation.
HBOS Group Reorganisation Act 2006
In 2006, HBOS secured the passing of the HBOS Group Reorganisation Act 2006, a private Act of Parliament that would allow the group to operate in a more simplified structure. The Act allowed HBOS to make the Governor and Company of the Bank of Scotland a public limited company, Bank of Scotland plc, which became the principal banking subsidiary of HBOS. Halifax plc transferred its undertakings to Bank of Scotland plc, and although the brand name was retained, Halifax then began to operate under the latter company's UK banking licence.
The provisions in the Act were implemented on 17 September 2007.
2008 Short Selling and Credit Crunch
In March 2008, HBOS shares fell 17 percent amid false rumours that it had asked the Bank of England for emergency funding. The Financial Services Authority conducted an investigation as to whether short selling had any links with the rumours. It concluded that there was no deliberate attempt to drive the share price down.
On 17 September 2008, very shortly after the demise of Lehman Brothers, HBOS's share price suffered wild fluctuations between 88p and 220p per share, despite assurances as to its liquidity and exposure to the wider credit crunch.
However, later that day, the BBC reported that HBOS was in advanced takeover talks with Lloyds TSB to create a "superbank" with 38 million customers. This was later confirmed by HBOS. The BBC suggested that shareholders would be offered up to £3.00 per share, causing the share price to rise, but later retracted that comment. Later that day, the price was set at 0.83 Lloyds shares for each HBOS share, equivalent to 232 p per share, which is less than the 275p price at which HBOS raised funds earlier in 2008.
In order to avoid another Northern Rock-style collapse, the UK government announced that should the takeover go ahead, they would allow it to bypass competition law. This law states that a company cannot hold more than 25% share of the mortgage market. Lloyds TSB will now hold a 28% share of the mortgage market.
Alex Salmond, Scotland's First Minister, previously an economist, said of the takeover:
"I am very angry that we can have a situation where a bank can be forced into a merger by basically a bunch of short-selling spivs and speculators in the financial markets."
Vince Cable, Liberal Democrats spokesman labelled the hedge funds which profit from short-selling as "masters of the universe".
Takeover by Lloyds TSB
Although the 18 September 2008 announcement by the HBOS board confirmed agreement to be taken over by Lloyds TSB, two main steps are required for this to take place:
- Three quarters of HBOS shareholder votes in agreement with the board's actions;
- UK government dispensation with respect to competition law.
Most of the shareholding votes at HBOS are in the hands of institutional investors and it is anticipated that takeover will proceed to a successful conclusion.
Prime Minister Gordon Brown personally brokered the deal with Lloyds TSB. The Lloyds TSB board have stated that troubled banks Merrill Lynch and Morgan Stanley were amongst the advisers recommending the takeover.
Operations
HBOS conducts all its operations through three main businesses:
- Bank of Scotland plc
- HBOS Australia
- HBOS Insurance & Investment Group Limited
Bank of Scotland plc
Bank of Scotland plc is the banking division of the HBOS group, and operates the following brands:
United Kingdom
- Bank of Scotland
- Bank of Scotland Private Banking
- Bank of Scotland Treasury Services
- Birmingham Midshires
- Halifax
- Halifax Financial Services (Holdings) Ltd
- Halifax Investment Fund Managers Ltd
- Halifax Share Dealing Limited
- Halifax Unit Trust Management Ltd
- Intelligent Finance
- Sainsbury's Bank (50%)
- The Mortgage Business (TMB)
- Blair, Oliver & Scott (Debt recovery)
- St James's Place Bank
International
- Banco Halifax Hispania
- Bank of Scotland Corporate
- Bank of Scotland International
- Bank of Scotland Investment Services
- Bank of Scotland (Ireland), trading as Halifax
- Bank of Scotland (Netherlands)
HBOS Australia
HBOS Australia was formed in 2004 to consolidate the group’s holdings in Australia. It consists of the following subsidiaries:
- Bank of Western Australia Limited
- Capital Finance Australia Limited
- St Andrew's Australia Pty Ltd
- BOS International (Australia) Ltd
HBOS Insurance & Investment Group Limited
HBOS Insurance & Investment Group Limited manages the group’s insurance and investment brands in the UK and Europe. It consists of the following:
- esure
- First Alternative
- St James's Place Capital (60%)
- Halifax General Insurance Services Ltd
- Halifax Insurance Ireland Ltd
- Clerical Medical
- AA
- Sainsbury's
- Sheilas' Wheels