Lloyds TSB shareholders vote in favour of 'super bank'

Graham Spooner, investment adviser at The Share Centre, provides an update on the vote and explains why HBOS shareholders are expected to follow suit later in the year.

"Opinions on the benefits of the HBOS takeover are likely to have been split, but when it came to the crunch more than 96 per cent of Lloyds TSB shareholders supported the proposed takeover. Shareholders also agreed to boost the capital of the bank by issuing 1 billion in preference shares to the UK Treasury and 4.5 billion in new ordinary shares, sold at 173.3 pence a share.

"It appears shareholders are banking on the future benefits that a takeover of this size could bring. If HBOS shareholders also support the vote, as expected, the takeover will create a powerful entity on the high street, which should offer some long term value for investors.

"Although HBOS shareholders will not be voting until 12 December 2008, we believe they have little choice, but to support the vote. It is unclear as to whether the bank has a contingency plan and they will not be eligible, on the same terms, for the Government's "bail out" money should the vote be rejected.

"In fact, the focus of the takeover is now likely to be on the necessary job cuts. Lloyds TSB and HBOS employ 145,000 staff between them. Lloyds expects the takeover to save 1.5 billion pounds a year by 2011, largely through thousands of job cuts."