Written by Monkey Woods
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Wednesday, 17 September 2008

image for Lloyds TSB Merges With HBOS, Economist Warns Customers "Withdraw Your Savings!"
One of the safest banks in the world tonight

Lloyds TSB is to merge with the troubled HBOS, creating a banking giant that will hold almost a third of UK customers' savings and mortgages. Economists have reacted by advising investors to immediately withdraw their savings from the new company.

Both Lloyds and HBOS have agreed to a deal, at a price of 232p per HBOS share, and the deal should calm uncertainty about the strength of Halifax-Bank of Scotland after a run on its shares.

With 20% of the UK mortgage market, HBOS is currently the country's largest mortgage lender. Lloyds ranks fourth with an 8% share.

On the London market on Wednesday, HBOS shares fluctuated wildly, climbing as high as 220p and falling as low as 88p.

Shares in the lender eventually closed 19% lower at 147.10p while Lloyds ended unchanged at 279.75p.

There were other developments in the interesting world of international banking:

Barclays Bank is to buy some Lehman Brothers assets after the fourth-largest US investment bank filed for bankruptcy protection, dealing a blow to the fragile global financial system.

The US Treasury is to help with an $85bn (£48bn) rescue package to bail out AIG, and the Bank of America bought Merrill Lynch in a $50bn deal. *

Taking all of the above into account, economist John Money of London firm Gambol & Gamble, said:

"These are dangerous times for banking. Every day that goes by, I stash more and more money under my mattress, and other investors would be wise to take note."

* If anyone understands any of the information above the red asterisk (apart from the bit about "withdraw their savings from the new company"), could you please contact me to explain it. I have to confess, I copied and pasted most of the text from a far more intellectual site, in order to appear knowledgeable, but now find myself somewhat lacking.
The last two paragraphs are all my own analysis.

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The story above is a satire or parody. It is entirely fictitious.

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