LEX The intervention of a brace of tartan knights hostile to the takeover by Lloyds TSB of Halifax Bank of Scotland has stirred up two interrelated debates. The first relates to public policy: is the government correct to sacrifice competition through the creation of a superbank for the sake of financial sector stability? The second revolves around the investment decisions facing the banks’ respective shareholders as they prepare to vote on the deal.
The policy rationale for the merger has been materially weakened by the decision to inject public funds directly into struggling banks. This has cut their systemic threat and restored much stability to the financial sector.
