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Lloyds chief wanted much more time on takeover deal

Lloyds TSB chief executive Eric Daniels has admitted he would have liked to have spent “three to five times” as much time doing due diligence on HBOS before the acquisition took place.

At a Treasury select committee meeting last week, Daniels revealed the bank spent 5,000 man-days in due diligence before giving the acquisition the green light but he said he would have liked to have spent “three to five times” the time checking the quality of the bank’s assets.

Daniels said: “There is only a limited amount of diligence that can be done. If we had unlimited access and more time, we probably would have put in three to fives the man-days we put in.”

Andrew Love, MP ,said: “How can you be so confident that this was a prudent deal if you would still have been doing the due diligence now?”

Daniels said Lloyds TSB is putting together a database on HBOS and that outcomes so far were “within the ranges we predicted”.

Lloyds TSB last week revealed HBOS lost £10bn in 2008. It says the results were worse than it predicted in November 2008.

Lloyds TSB itself fared much better in 2008. It made a profit of £1.3bn after writedowns of more than £1bn. The company says the group’s capital ratios of as much as 6.5 per cent will make it adequately capitalised.

Parts of the group write-downs include £600m owed to the FSCS for levies, and include £850m lost when the HBOS business was sold.

Daniels told shareholders: “We recognise that the short-term outlook is more challenging but Lloyds Banking Group has the largest UK financial services franchise with excellent long-term earnings’ potential.”

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