Britain blocks takeover of Abbey National by Lloyds TSB

Tuesday, July 10th 2001, 12:00 am
By: News On 6

LONDON (AP) _ The government on Tuesday blocked Britain's third-biggest bank, Lloyds TSB Group, from buying mortgage lender Abbey National PLC, arguing that the takeover would be against the public interest.

The long-awaited announcement by the Department of Trade and Industry dealt a major setback to Lloyds, which had made three separate offers for Abbey. Its latest offer in January was worth $27.9 billion.

Trade Secretary Patricia Hewitt said she blocked the deal because it would reduce competition for personal accounts and banking services for small- and medium-sized enterprises, ``with the adverse effects in both markets of higher prices to customers and reduced innovation.''

Lloyds has been eager to make an acquisition, and tried in vain to woo Abbey National's management in December. The target bank rejected a first, unspecified offer along with a second, sweetened, bid.

Abbey itself had been negotiating to merge with Bank of Scotland at the time of Lloyds' offer.

The bid was conditional on Abbey's recommending the offer to its shareholders and, crucially, on approval for the deal from financial regulators.

In a statement, Lloyds said it was disappointed with Tuesday's decision but added: ``The growth opportunities for Lloyds TSB are very considerable, with or without Abbey National.''

Unions welcomed the decision as a way to help slow down bank mergers that threaten to lead to large cuts in jobs.

Lloyds had said that as many as 9,000 jobs would disappear over four years from the banks' combined staff of 100,000.