18 September 2008

Statement by the Chancellor on the proposed merger of Lloyds TSB and HBOS

The Chancellor welcomes the announcement by Lloyds TSB and HBOS that they have agreed the terms of a proposed merger.

He fully supports the statements made by the Bank of England and the FSA about the importance of this merger to ensure financial stability in the UK in the interests of consumers and the wider economy.

The current circumstances in the financial markets are truly exceptional. In recent days the financial markets across the world have seen an unprecedented level of uncertainty.

All institutions providing financial services in the UK are subject to high standards of regulation to ensure that the UK has a stable and competitive market for banking services. The announcements made today provide further confidence for UK retail depositors, business customers and investors.

The Secretary of State for Business Enterprise and Regulatory Reform has announced that he intends modifying legislation affecting takeovers so that the stability of the UK financial system can be taken account of in consideration of the public interest.

He is acting on the advice of the UK Tripartite Authorities (HM Treasury, Bank of England and the Financial Services Authority) under section 42 of the Enterprise Act 2002 which allows him to extend the grounds for considering public interest.

He has given notice that he intends to issue an intervention notice in the proposed merger announced today between HBOS and Lloyds TSB to take account of this issue.