Halifax and Bank of Scotland discuss surprise merger

Mortgage bank Halifax and the Bank of Scotland surprised the City today by announcing they have begun merger talks to create a ?28bn banking giant.

The proposed move would produce one of Britain's biggest banks, with 57,000 staff and more than 1,000 branches.

The merged banks could benefit customers by posing a threat to the traditional domination of Barclays, HSBC, Lloyds TSB and Royal Bank of Scotland. The office of fair trading has been concerned about the "Big Four's" domination of the small business banking and current account markets.

Prior to today's announcement, the Edinburgh-based Bank of Scotland (BoS) had already failed twice in merger attempts with Abbey National and NatWest.

Shares in both companies rose around 6% today as the City appeared to welcome the proposed deal. The move is described as a "merger of equals", although Halifax would be the larger partner with 37,000 employees and a market value of around ?18bn. BoS has some 20,000 staff and is valued at more than ?10bn.

A merger would help the Halifax strengthen areas away from the mortgage market, while BoS would get a stronger influence outside Scotland.

Details of the proposed merger are sketchy, although the news will raise concerns about the security of thousands of banking jobs. While there is little overlap in terms of branch locations, the enlarged bank will need to decide where to have its head office.

Bill Furness, chief executive of the Edinburgh Chamber of Commerce, said: "Clearly we are concerned about what will happen to jobs, particularly in Scotland, and whether there will be an overlap between branches."

John Edmonds, general secretary of the GMB union, said: "We will be monitoring the situation and talking to management to ensure that the workforce is not adversely affected."

News of the merger comes just weeks after Lloyds tabled a ?19bn bid for Abbey National.

Related articles
09.04.2001: BoS to resume Abbey talks
01.03.2001: Abbey surrender leaves two banks prey to takeover
11.03.2001: Time to consummate Abbey's stormy love affair


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