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HBOS pension trustees threaten to block takeover by Lloyds

Just when you thought that the HBOS and Lloyds merger was done and dusted it would appear that the trustees of the HBOS pension scheme are unhappy with the security being offered to their member's pensions. They have threatened to block the takeover by Lloyds unless they receive certain assurances from the enlarged group with regards to future pension fund contributions and security of retirement benefits for those already in the HBOS scheme.

This move comes at a time when over £65 billion has been wiped off the pension funds attributed to the top 100 companies in the FTSE 100 index. Weakened balance sheets, subdued business levels and enormous concerns about the future direction of the UK economy do not bode will for the immediate future of pension fund investments in the UK. Quite what securities Lloyds TSB can afford to offer the HBOS pension trustees remains to be seen but they do have the power to cause serious problems for the merger.

While it would seem highly unlikely that the two groups cannot come to some kind of arrangement this whole merger arrangement has highlighted the complex nature of these transactions. There are so many parties who need to agree, substantial funding to be raised and regulatory approval from a number of quarters and it can all take a very long time!

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