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Halifax and Bank of Scotland plan £26bn merger

Halifax and Bank of Scotland are in talks over a possible £26bn merger to create a bank to rival the big four on the high street.

Halifax, the UK&#39s biggest mortgage lender, confirmed last week the companies are negotiating a “merger of equals” although, at £17bn, Halifax is valued at around £7bn more than BoS.

The banks say a merger would on a nil-premium basis involving a straight swap of shares. The move has taken the industry by surprise as BoS is seen as a takeover target following two failed merger attempts with Natwest and Abbey National.

BoS was elbowed out of the Natwest deal last year by larger rival Royal Bank of Scotland, while the tie-up with Abbey was dropped after Lloyds TSB made an £18bn offer, currently under scrutiny by the Competition Commission.

Industry sources say a Halifax and BoS merger would be unlikely to suffer the same fate as there is little overlap between the two in terms of current accounts and mortgage lending.

It is believed that BoS chief executive Peter Burt would initially head up the merged business, with Halifax chief executive James Crosby taking the reins after Burt&#39s retirement.

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