HBOS shareholders approve takeover

HBOS shareholders overwhelmingly approved the bank's takeover by rival Lloyds TSB and an £11.5 billion funding boost from the taxpayer today.

Based on votes cast before the meeting, the moves were supported by an 84% majority of individual shareholders, and 98% by the value of shares voted.

Shareholders gathered in Birmingham to give the go-ahead to the deal and fundraising which is likely to give the Government a 43.5% stake in the combined bank.

The merger with Lloyds TSB will create a superbank with 145,000 staff and 3,000 branches.

The bank said a record 56% of HBOS's shares voted in the meeting. All other resolutions were passed by a majority of 99%.

Although the Lloyds TSB takeover staves off uncertainty for the bank, which could even have resulted in the bank's nationalisation, shares in HBOS fell 21% after the results, while Lloyds TSB slid 17%.

HBOS chairman Dennis Stevenson apologised for the ailing bank's plight but came under fire from shareholders.

Mr Stevenson said the board was sorry about the financial impact of the crisis on investors, adding that he was "neither happy nor proud".

He told the meeting in Birmingham - delayed for half an hour by a serious accident on the M6 - that the world was living through "the most pronounced financial crisis since the Great Depression".

The Lloyds takeover has been opposed by some Scottish businessmen, but the board considered all alternatives, the chairman said. "I cannot say too strongly that your board looked at every possible solution... we do not cede our independence lightly."

But investors voiced criticism of the bank's senior management.

Shareholder Peter Hapworth said he was "appalled" at how HBOS had been run in the last few years.

He said: "Let's face facts, it is a bank like yours along with a number of other banks that have caused the crisis in the first place. You all went dashing for short-term gain to fulfil bonuses and salaries."

Mr Hapworth said the banks were now trying to hide behind "the crisis that they had caused".

Another investor, Brian Lockley, said: "What I've heard so far reminds me of my old school reports - could do better."

Speakers expressed concerns over the pensions of the bank staff following the merger with Lloyds.

But the HBOS chairman said: "We are proud of the fact that the HBOS pension scheme is very well funded as I stand here today.

"We are confident that it will continue to be well funded, if not better funded, if the merger with Lloyds goes ahead."

Unions, fearful of thousands of job losses, protested outside the meeting today, although Mr Stevenson described reports of 40,000 job losses as "scaremongering".

Protesters handed out mock ballot papers to investors attending the meeting, urging shareholders to consider the impact of the takeover on staff.

Rob MacGregor, Unite's national secretary with responsibility for finance, said: "We are obviously concerned about redundancies... assurances on jobs have been few and far between."

Questioned in the meeting by Unite's representatives, Mr Stevenson admitted that he had had "no specific guarantees" on jobs and staff terms and conditions, although he added that Lloyds would approach the takeover "carefully and considerately".

Mr Stevenson was also criticised for accepting a lower offer for the business than initially agreed, but he said this was down to the dire situation and weak bargaining position the business found itself in as wholesale markets shut down.

He said: "In the extreme volatility we found ourselves in, we had to negotiate the best deal we could... it is as simple as that."

Scottish Liberal Democrat leader Tavish Scott said: "I am disappointed but not surprised that this deal has been approved.

"This is bad news for jobs and competition in Scotland. Scottish customers and businesses will face higher bank charges in the future as a result.

"The UK Government and the HBOS board were wrong to roll this deal through so smoothly."

SNP MSP Alex Neil called the outcome "highly regrettable".

"The Chancellor and Prime Minister should be ashamed of themselves for presiding over the unnecessary end of one of Scotland's oldest institutions," he said.

"The UK Government has used every trick in the book to push this takeover through.

"Instead of offering a level playing field and seeking alternatives to save jobs, Brown and Darling have consigned up to 40,000 employees to redundancy.

"Tens of thousands of families up and down the land will suffer as a direct result."