In an interview on BBC News, James Edsberg spoke about the speculative pressures surrounding the HBOS share price which finally led to the bank’s merger with LloydsTSB.
"This was a deal done under pressure but it would be wrong to blame speculators as solely responsible for the demise of HBOS" said James Edsberg. "It was one of the weaker banks for two reasons. First, it has a large exposure to commercial real estate. And in the 1990’s recession, many banks got their fingers badly burnt on commercial property. Second, HBOS has the largest share of the home loans market and if the British Economy goes into recession, HBOS will be hit worst from the bad debts.”
"The speculation surrounding the shares has undoubtedly increased volatility but those including the hedge funds who make money from shorting shares would argue that they look at the fundamentals of a business and only hasten the inevitable."
"It’s a great deal for LloydsTSB. Despite the short term risks from taking on such a large acquisition, the combined bank will have 25% of the current account market, the largest share of the mortgage market and with the Halifax, the biggest savings franchise in the UK. But Lloyds can’t swallow HBOS whole – that would simply move the problem in one part of the banking sector to another. We should expect to see parts of the business sold off perhaps to other banks."
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"This was a deal done under pressure but it would be wrong to blame speculators as solely responsible for the demise of HBOS" said James Edsberg. "It was one of the weaker banks for two reasons. First, it has a large exposure to commercial real estate. And in the 1990’s recession, many banks got their fingers badly burnt on commercial property. Second, HBOS has the largest share of the home loans market and if the British Economy goes into recession, HBOS will be hit worst from the bad debts.”
"The speculation surrounding the shares has undoubtedly increased volatility but those including the hedge funds who make money from shorting shares would argue that they look at the fundamentals of a business and only hasten the inevitable."
"It’s a great deal for LloydsTSB. Despite the short term risks from taking on such a large acquisition, the combined bank will have 25% of the current account market, the largest share of the mortgage market and with the Halifax, the biggest savings franchise in the UK. But Lloyds can’t swallow HBOS whole – that would simply move the problem in one part of the banking sector to another. We should expect to see parts of the business sold off perhaps to other banks."
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