Bank merger hits problems over equity stakes

HBOS came under the spotlight amid talk that the integration of its integrated finance unit with Lloyds TSB could prove to be a problem to the merger of the two banks. HBOS owns stakes in some of Britain's largest privately owned companies via its Bank of Scotland's Integrated Finance unit. Lloyds TSB has its own private equity investment division in the shape of Lloyds Development Capital (LDC). Prior to the planned merger, HBOS appointed investment bank UBS to raise a fund from private investors to acquire part of HBOS's stakes in firms such as Keepmoat, the social housing renovator, and Ainscough, Britain's largest crane hire operator. HBOS wanted to offload a £400m portfolio of investments to shrink its scarred balance sheet. Yesterday, well-placed sources said there was talk that Lloyds TSB had asked investment bank NM... [read full story]