HBOS: how to measure its strength

By THIS IS MONEY
Updated:

 

We offer a brief overview of how your bank has fared over the past year...

HBOS halifax Bank of Scotland bank

*Important: Shares in HBOS have been suspended and the bank officially merged with Lloyds TSB on 19 January. From now on, please look at Lloyds safety overview the for an insight into the stability of your HBOS savings.

Why all the interest in banks?

The banking crisis in Sept/Oct 2008 after the fall of Icelandic banks Kaupthing Edge and Landsbanki, followed closely by the UK's own Bradford & Bingley, prompted widespread concerns over the safety of the UK banking industry.

Many of these concerns have now passed as a result of the Government's efforts to stabilise the sector, but many savers are still curious about the overall stability of their bank/building society. For comment on the stability of the industry in general, read our guide to bank strength, while our bank safety guide outlines how you should spread your savings.

HBOS - the background

HBOS' had a relatively high rating throughout 2008, but this fell as the year progressed due to its high exposure to the deteriorating UK property market and its relatively greater reliance on the money-markets for borrowing money as opposed to relying on High Street savers' cash.

The bank accepted £13bn of Government funds at the end of 2008 as part of its £25bn offer of liquidity to the banking industry. As Lloyds accepted £4bn, this allowed the Government to take an initial 43.5% stake in the merged HBOS-Lloyds giant, the biggest nationalisation in history at the time.

However HBOS and Lloyds renegotiated the terms of their proposed merger in October as shares in both banks slumped following the news of the Government's bail-out plan.

HBOS merged with Lloyds TSB on 19 January to form Lloyds Banking Group.

 

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