Articles | HBOS coup pair turn to shareholders

HBOS coup pair turn to shareholders

Published: Sunday, 9 November 2008, 10:38AM

Two former bank chiefs will appeal to HBOS shareholders in a bid to scupper the Lloyds TSB takeover.

Former RBS and Bank of Scotland bosses Sir George Mathewson and Sir Peter Burt want to force out HBOS's chairman and chief executive and scrap the merger plans in favour of a recapitalised stand-alone bank.

Board members unanimously rejected the proposals on Saturday night, but Sir George and Sir Peter plan to contact shareholders directly.

The attempted boardroom coup came to light in a letter to HBOS chairman Lord Stevenson, in which the respected bankers claimed the £12 billion merger was "no longer necessary" given the Treasury's plans to inject cash into the banking sector.

Sir George and Sir Peter proposed taking over at the top of HBOS and re-evaluating the situation, saying: "We firmly believe that a standalone recapitalised HBOS, which has a strategic plan agreed and new management teams put into place will represent far greater upside and stability than the Lloyds takeover.

"If, however, Lloyds makes a more appropriate commercial offer for HBOS that too will be given full consideration."

HBOS board members reportedly held a telephone conference yesterday to discuss Sir George and Sir Peter's challenge before rejecting it.

Sir George - who served as chief executive and chairman at RBS before stepping down in 2006 - said: "I do not think it makes any difference to us whatsoever. It is what we suspected."

"I think we will contact some shareholders and ask them what they feel about the proposal. It is all about evaluating the best way forward."

The challenge came as a particular embarrassment to HBOS as Sir Peter is partly responsible for its creation, having served as chief executive at Bank of Scotland at the time of the merger with Halifax and going on to serve as deputy chairman of HBOS.

Labour MP Barry Sheerman, who represents HBOS employees in his Huddersfield constituency, described the challenge as "dynamite", adding: "This letter shows with crystal clarity that there is no need for a merger. The proposed merger is a rip-off for shareholder value and for workers at HBOS."