Shares in LLoyds TSB were indicated sharply lower on Thursday morning. The London market detects all sorts of Brownite tinkering with the plan to take over HBOS.
Here’s the key extract from the statement:
The Enlarged Group will continue to use The Mound as its Scottish headquarters, will continue to hold its Annual General Meeting in Scotland and will continue to print Bank of Scotland bank notes. In addition the management focus is to keep jobs in Scotland.
Projected cost savings are vague and rather less than analysts had hoped, indicating Lloyds chief executive Eric Daniels has succumbed to political pressure to preserve jobs.
Lloyds TSB estimates that a combination with HBOS will lead to an additional contribution to earnings before tax from cost synergies significantly in excess of £1 billion per year by 2011.
And the capital strength of the combined bank is nothing to write home about:
Total capital ratio 11.4 per cent.
Tier 1 capital ratio 8.0 per cent.
Core tier 1 5.9 per cent.
The target core tier 1 ratio will be in the 6 - 7 per cent. range and Lloyds TSB expects to be within the target range during 2010.
One other point: the dividend this year will be paid in scrip, which will infuriate all those who had bought Lloyds for its chunky yield.
