The combination with Lloyds TSB is the right thing to do

Right now, market volatility in the banking sector is almost unprecedented. This transaction means that combined with Lloyds TSB, HBOS will be part of an even bigger and stronger financial services group. That is undoubtedly the right thing for HBOS.

Despite the fact that HBOS is a well capitalised and profitable bank, the share price gyrations were not helpful, to put it mildly. It was time to act decisively to protect and enhance our great franchise, including in Yorkshire.

Why has HBOS agreed to be acquired by Lloyds TSB?

The deal with Lloyds TSB is about two things. Firstly, getting the best possible deal for our shareholders. This includes the great number of colleagues and customers in Yorkshire who are shareholders.

The new company will be a major financial player. HBOS shareholders, including approximately 225,000 in Yorkshire, will share in its success – they will own 44 per cent of it. All of us who are shareholders will participate in the success of the business in the future.

Secondly, protecting and growing our franchise. Together with Lloyds TSB we will enjoy a strong position in retail banking, corporate banking and insurance and investment. The reality is that, as part of a bigger franchise, we will be able to grow the business more than we could have as a standalone HBOS.

A very good match

There is a natural fit between HBOS and Lloyds TSB. Both banks have a long and proud history of delivery based on providing good value products for customers, backed up by excellent service. The combined group will be one of the strongest and largest financial institutions in the world.

This deal brings together two of the strongest franchises in UK banking. It's a very powerful combination, providing a significant platform for creating long-term value.

Well known and respected brands like Lloyds TSB, Cheltenham & Gloucester and Scottish Widows are all part of the Lloyds TSB Group. Likewise, Halifax, Bank of Scotland and Clerical Medical are just some of the incredibly powerful brands within the HBOS family. The intention is to continue to use the core brands from both companies in the combined group.

Understandably, there are concerns about what the acquisition means for HBOS colleagues and, indeed, their families. Please remember that it is still very early days.

The merger will inevitably lead to some job reductions, but the majority of HBOS colleagues are likely to stay with the enlarged group, reflecting the sheer scale of our business.

HBOS has a long and proud heritage in Yorkshire.