Government Bars Hostile Takeover of Abbey by Lloyds TSB

11 July 2001

Lloyds TSB’s £19 billion hostile takeover bid for rival bank Abbey National came to an abrupt halt yesterday with the intervention of trade and industry secretary Patricia Hewitt.

Acting on advice from the Competition Commission and the Office of Fair Trading, Hewitt’s decision reflects widespread concern at the potentially adverse effect of the merger on UK banking competition – especially within the business banking sector. “I accept the unanimous opinions of the Competition Commission that the merger would be against the public interest and should be prohibited,” she said.

The government block effectively ends the recent spate of indigenous banking and financial services mergers. Onlookers predict that the voracious ‘big four’ UK clearing banks will now direct their predations outside Britain where there is widespread belief that that banking consolidation has gone far enough.

Abbey National, itself no mean predator, is in lip-smacking mode after the last minute reprieve. Predicts chief executive Ian Harley, a vociferous opponent of the Lloyds bid: “There will be further consolidation in the UK but it will be outside the bigger banks.” He declined to comment on any particular target.

News source: The Times (London)