British bank Lloyds TSB on Thursday agreed to buy rival HBOS for 12.2 billion pounds (15.4 billion euros, $21.8 billion) as the raging global financial storm claimed another victim. The share price of HBOS rocketed 50.9 percent to 222 pence in reaction to the takeover bid pitched at 232 pence per share and aimed at creating Britain's third-largest bank behind Royal Bank of Scotland and HSBC in first place. “Lloyds TSB and HBOS announce that they have reached agreement on the terms of a recommended acquisition by Lloyds TSB of HBOS,” the pair said in a statement. Analysts estimate that up to 40,000 jobs could be lost from the banks' combined 145,000 staff following the deal and that hundreds of branches could close. HBOS has 1,100 on Britain's high streets and Lloyds TSB 1,900. Business Secretary John Hutton is effectively extending Britain's Enterprise Act to ensure that the deal goes through “on public interest grounds,” his department said in a statement shortly after the deal. The landmark all-share merger, effectively a rescue plan for Britain's biggest mortgage lender, comes after HBOS shares plummeted in recent trading following days of global stock market chaos and economic gloom. Lloyds TSB shareholders would own 56 percent of the issued share capital under the acquisition and existing HBOS shareholders 44 percent. HBOS, or Halifax Bank of Scotland, is the latest global bank to fall foul of the ongoing credit crunch following the collapse of US group Lehman Brothers, the sale of Merill Lynch and the rescue of insurer AIG earlier this week. “This is the right transaction for HBOS and its shareholders,” said HBOS chairman Dennis Stevenson in the release. “Against the backdrop of the very high levels of volatility our industry is experiencing, the combined group will be one of the strongest players in the UK financial services sector.” Analysts and regulators expreThe value of shares in HBOS - created by the merger of Bank of Scotland and Halifax in 2001 - had slumped by a total of 55 percent during the first three days of the week. HBOS and Lloyds TSB together hold nearly a third of Britain's savings and mortgage market, but competition watchdogs will not block the deal as it was backed by the government. “This will be a unique opportunity to accelerate and extend our strategy and create the UK's leading financial services group,” Lloyds TSB chairman Victor Blank said. The deal was expected to be completed toward the end of the year or in early 2009. HBOS shareholders will receive 0.83 Lloyds TSB shares for every HBOS share.
