HBOS to be rescused by Lloyds TSB

[Brian Turner]

Extraordinary news in a week of extraordinary news across the financial worl this week: HBOS in merger talks with Lloyds TSB

Let's be clear - this isn't really a commercial decision by Lloyds TSB - this is effectively a front rescue to prevent HBOS going the way of Northern Rock.

The UK government can't afford another Northern Rock, in either a bank run, or a rescue, so it looks like this is something they've likely been encouraging.

It's pretty similar to how Bank of America bought out Merrill Lynch at the weekend after iot became clear Merrill would fail due to lack of investor confidence after Lehman Brothers announced plans to file for bankruptcy.

HBOS had a sound business, but lost market confidence, and that would have escalated the situation into forcing those fears to be realised with the collapse of HBOS.

It's a good match, too, because Lloyds TSB has a limited exposure to the mortgage market.

So while this is probably good news, it's sad news as well, but underlines the extreme fear and uncertainty in the financial markets at present.

[jpolito830]

Thanks for the article...I would think this is more bad news than good, for the exact reason you mentioned. The absolute fear in the market today outweighs the good IMO