Shareholders convened at the NEC in Birmingham and voted almost unanimously in favour of the deal.
Although the merger was given the go ahead, many shareholders were unhappy with the situation. One HBOS shareholder Gary Maddock told Reuters: “I shall vote in favour because the bank has got itself into such a state it’s the only way to save the company.”
Last month Lloyds TSB shareholders voted yes for the merger.
The market was also nervous about the outcome; HBOS shares fell 20 per cent, Lloyds TSB shares fell 17 per cent and RBS shares fell by nearly 15 per cent.
Lloyds TSB chairman Sir Victor Blank: “We are delighted that HBOS’s shareholders, mirroring Lloyds TSB’s shareholders, have demonstrated their support for the compelling business opportunity this acquisition presents.
“With both sets of shareholders behind us, we look forward to completing the transaction in mid-January 2009 to create the newly named Lloyds Banking Group.”
This came after HBOS revealed that its secured lending impairment is up £400m from September, to £700m. HBOS predicts these losses will continue.
It also reported that as at 30 November the estimated losses due to market dislocation totalled £2.2bn, which included impairment losses in the banking book of £600m.
HBOS also revealed that the FSA has issued draft guidance regarding the levies to be made by the FSCS in wake of the B&B bailout. Based on the information currently available, HBOS says it is likely to accrue a charge of around £200m in 2008.
It says: “UK recession and increasing unemployment will continue to present a particularly challenging operating and credit environment.
“However, through the injection of capital and liquidity facilitated by the UK Government, both currently and going forward, HBOS remains confident in its ability to navigate through this difficult period, as it becomes part of the enlarged Lloyds Banking Group.”