Financial news of the most dramatic possible kind has the
headlines: HBOS is to be taken over by Lloyds TSB in a deal worth –
at current share prices – £12.2bn. Edinburgh-based HBOS’s shares
had plunged in recent days due to fears over the strength of its
capital base, despite the bank’s insistence that it was sound.
A deal was brokered with help from the government – Gordon Brown
is said to have played a part – in order to avert another Northern
Rock-style fiasco, which would have undermined confidence in the
economy to a perilous degree.
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Competition issues are, for the moment, being swept to one side
by the government as it is seen as more important to “ensure the
stability of the UK financial system”. However, they cannot be
ignored forever, and while the press has so far concentrated on the
mortgage and current account side of the business, in motor finance
the news will mean great upheaval in two core areas: point-of-sale
consumer finance, and corporate fleet leasing and management.
On the fleet front, the newly-merged Lloyds-HBOS will have to
decide what to do with the two fleet businesses it will own: Lex
and Lloyds TSB Autolease, the largest and second-largest fleet
operators in the UK.
Combining the two will create an operator with a fleet of
somewhere in the region of 400,000 vehicles – give or take the odd
10,000 or so units.
At the PoS, meanwhile, combining the operations of Bank of
Scotland Dealer Finance and Black Horse Motor Finance will create a
consumer motor finance behemoth – and will give dealers less choice
as to bank-owned PoS partner.
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By GlobalDataQuite aside from the purely technical difficulties of
integrating the two PoS finance houses and fleet operators, there
is the not-so-small matter of staff integration – and
blood-letting. As Ken Murray, an analyst at Blueplanet told the
BBC, it is likely that some bank directors will lose their jobs –
the new entity “will not need two boards of directors”.
But which directors? Jon Walden has, in the past, successfully
integrated huge fleets to create the present-day giant that is Lex
– will Lloyds decide his expertise makes him the right man to
oversee any merger of Lex and Autolease?
What will happen to the displaced staff, from both the fleet and
the consumer businesses? After the collapse of Lehman Brothers,
staff clustered in the nearest Costa coffee shop and immediately
started planning new ventures.
We could see the same post-merger, perhaps resulting in new
outfits in broking, or in something new, exciting and
technologically advanced. What is for sure is that any talented and
experienced people who lose their jobs in the shake-out are
unlikely to be lost forever to the world of motor
finance.
