Bank duo pose questions
They are not advancing a rival bid for HBOS. They are not setting out specific alternative financial proposals. They have not formed a consortium to rival the Lloyds TSB offer.
In fact, Sir George Mathewson and Sir Peter Burt are, mostly, simply posing the questions which others have already set out: including, from the outset, on this blog.
But they are rather intriguing questions, are they not?
Sir Peter was on the telly yesterday, Sir George on the wireless this morning. Both emphasised they wanted primarily to question the logic behind the Lloyds TSB deal: to suggest that it might not be sensible or in the wider public interest.
Question One: is this in the interests of the customers?
The two eminent bankers note that the Office of Fair Trading reckoned the deal would be anti-competitive.
That is because it would create a near oligopoly in the market: a huge conglomerate that would not be tolerated in other circumstances. Logically, that argument is confirmed by the fact that competition law has had to be set aside by the UK Government in order to permit the merger.
Against that, UK Ministers and the banks themselves argue that the circumstances demand distinctive action: that it is the only deal on the table with a prospect of creating stability.
Question Two: is this in the interests of HBOS? Why cannot the recapitalisation on offer be made available to HBOS individually, given that Lloyds also requires support? Has the merger been superseded?
Yes, say the eminences grises. No, say UK Ministers and the banks. There are further problems of liquidity. HBOS would require to be nationalised if the deal fails.
Question Three: is this in the interests of Scotland? No, say the two bankers. Scotland would be better served by an independent HBOS. Yes, say others: Scotland would not be well served by a weakened, fractured bank.
It is important to note that the Scottish issue is down the list for Burt and Mathewson, at least in the way they present their case. That is because they are pitching to shareholders more generally - but also because they believe the interests of customers outwith Scotland are jeopardised.
At this stage, it still seems most likely that merger goes ahead. But this is a significant question mark.
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