Formation of Lloyds Banking Group puts 30,000 jobs at risk
Lloyds TSB’s announcement today that it intends to make annual savings of £1.5 billion through its merger with HBOS has sparked an angry reaction from trade unions, fearful of large-scale redundancies.
The latest estimate of cost efficiencies is £500,000 above an earlier £1 billion target and analysts are predicting that up to 30,000 jobs could go through the closure of branches, call centres and the integration of IT systems.
According to a report in The Times, Lloyds TSB will make £790 million in savings from cuts in the merged banks’ retail operations and a further £235 million by folding together their insurance and investment businesses.
Costs in wholesale and international banking will be shaved by £430 million.
Shareholders of both banks have yet to vote on the deal and the possibility of a counter bid emerged this weekend, from an unnamed international financial firm.
However, both HBOS and Lloyds TSB are confident that the merger will go ahead and have pencilled in a completion date early in the New Year.
Last week, details of the new board were revealed, with only one HBOS executive included.
The name of the new group has been announced today and spells the ultimate demise of the Halifax and Bank of Scotland corporate colours. The new company will be known as Lloyds Banking Group.
Abbey and Deutsche Bank linked in Porterbrook sale
Abbey is reported to be selling its train leasing business to Deutsche Bank, for £2 billion.
Porterbrook Leasing Company was acquired by the bank in 2000 from Stagecoach, for approximately $1.2 billion in cash.
The firm specialises in the leasing of all types of railway rolling stock and associated rail equipment.
The business is now valued at around £2 billion and according to a report in The Sunday Times, Abbey’s parent company, Santander, could be making the disposal to improve its capital position.
In June, Royal Bank of Scotland announced that it had sold its Angel Trains rolling stock leasing business to a consortium headed by Australian infrastructure group, Babcock & Brown, for £3.6 billion.
Other members of the consortium included Deutsche Bank and AMP Capital Investors.
It is understood that HSBC is also considering the sale of HSBC Rail, another train-leasing firm, also valued at around £2 billion.
Angel Trains, HSBC Rail and Porterbrook are the three leading rolling stock leasing companies in the UK, having been formed out of the privatisation of British Rail between 1994 and 1997.
Israel cuts interest rates by 25 basis points
The Bank of Israel has announced a cut of 25 basis points in interest rates for November, which will stand at 3.5%.
The rate cut was largely expected, as concerns regarding inflation declined and new economic activity stalled.
Therefore the central bank decided that the balance of benefits and risks favoured a lower interest rate to try and promote economic activity, particularly as inflationary pressures appear to have begun to ease.
Tax revenues, demand and activity have all declined over the last few weeks, prompting the bank to try and bolster the situation through lower rates.
As with many other nations, the share indices in Israel have fallen substantially in recent weeks, down about 20%.
This decision follows an unscheduled cut of 50 basis points made on 7 October, with a view to returning inflation to the target range of 1-3% over the course of the next year.
The Bank of Israel forecasts a lessening of inflation in the medium term, and intends the lower interest rate to ease the cost of borrowing and promote economic growth.