All set to go: Lloyds has confirmed that it is intending to take over HBOS for £12.2bn. As expected yesterday, the share price of HBOS taken as the base of the merger valuation was the pre-fall value of 232p, as opposed 100p at which HBOS was trading just before the announcement of the merger yesterday.

The deal will probably be completed very quickly to end uncertainty around HBOS generally and help consumer confidence in the UK.

Lloyds is expected to generate cost savings of £1bn a year whilst slimming down the operations of the combined bank.

Job losses: To you and I this means that there will definitely be job losses as the result of this merger. There are some rumours of 40,000 jobs expected to go, which Lloyds denies. This would be about 27% of the total workforce of about 145,000 people and looks very, very aggressive. We’ll just have to wait and see – usually rumours that are strongly denied end up being true!

The merger will result in the formation of a huge institution owning a third of the UK mortgage market. The competition and monopolies commission did not stop this as the deal was encouraged and backed by the UK government.

The job losses we fear as the result of this transaction will add to the other expected job losses in the City in 2008 – together this paints a sad picture with many people ending up out of work. I am sure not everyone will have sympathy with the ex-high earners but there are plenty of people in the financial sector who are not earning crazy money and are the primary earners for their family. Losing their jobs will be tough on them.

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