New bid to block HBOS takeover

A last-ditch bid to block the planned Lloyds TSB merger with HBOS was launched in the UK today.

A last-ditch bid to block the planned Lloyds TSB merger with HBOS was launched in the UK today.

A group of businessmen, bank customers and shareholders is to seek a legal ruling that British Business Secretary Peter Mandelson’s decision to allow the merger was unlawful.

The group is to seek the ruling from the Competition Appeal Tribunal, a specialist legal body whose function is to decide appeals on competition issues.

Tribunal cases are heard by panels chaired by a judge who sits with two experts.

The legal bid is being mounted by the Merger Action Group (MAG), whose spokesman is an Edinburgh architect, Malcolm Fraser, who was responsible for the repair and renewal of HBOS’s historic headquarters in Edinburgh.

The British government gave the green light to the takeover on October 31 after over-ruling competition concerns raised by the Office of Fair Trading.

Peter Mandelson said the public interest of “preserving the stability of the financial system” outweighed any potential anti-competitive effects.

Lloyds TSB shareholders backed the merger at a meeting in Glasgow on November 19 and HBOS shareholders are to decide in December.

The MAG is asking for the tribunal to sit in Edinburgh as it is a Scottish group and both banks are registered in Scotland.

But it also wants to act as a rallying point across the UK and is seeking the support of unions, industry bodies and consumer groups.

Mr Fraser said: “As a group, we are extremely concerned that due legal process has been ignored. In Scotland, particularly, there is a widespread and growing unease at what has taken place.

“Given that taxpayers are ultimately funding the takeover, we are simply asking that the law is properly applied and that our long-term interests are protected. We do not feel that is too much to ask.”

He said the tribunal had the power under the Competition Act to force Peter Mandelson to refer the proposed merger to the Competitions Commission.

The group’s case is based on three points.

It argues Lord Mandelson was obliged by law to keep an open mind in reaching his decision but was “fettered” by statements made by the Prime Minister and the Chancellor of the Exchequer.

Instead of using the legislation in place at the time, new laws were promoted to approve the merger.

And the merger was said to be needed to avoid the collapse of HBOS and a loss of stability in the financial system, but this argument was superseded by the Government’s wider rescue package for the banking sector.

Mr Fraser said: “The (British) government has gone out of its way to discourage alternative interests to come into play for the future of HBOS. This is not a level playing field. We aim to level it and ensure that the UK’s public interest is served as it should be.”

More in this section

The Business Hub
Newsletter

News and analysis on business, money and jobs from Munster and beyond by our expert team of business writers.

Sign up
Puzzles logo
IE-logo

Puzzles hub

Visit our brain gym where you will find simple and cryptic crosswords, sudoku puzzles and much more. Updated at midnight every day.

Lunchtime
News Wrap

A lunchtime summary of content highlights on the Irish Examiner website. Delivered at 1pm each day.

Sign up
Revoiced
Newsletter

Our Covid-free newsletter brings together some of the best bits from irishexaminer.com, as chosen by our editor, direct to your inbox every Monday.

Sign up