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Winners and losers

Christmas is still some way away but for Lloyds TSB it came 12 weeks early this year and CEO Eric Daniels must still be pinching himself about the $12bn deal. Whether preliminary discussions began six weeks ago or not, what is not in doubt is that Lloyds emerges from this as a credit crunch winner and regrettably some HBOS staff may emerge as blameless victims.

The deal is good news for the tripartite authorities in so far as it was expediently brokered and the absurd prospect of queues forming outside Halifax branches never materialised. It is unmistakenly better news however for Lloyds shareholders who have grown accustomed to a largely risk-averse approach from its executives and whose hubris over this achievement should be contained because the opening was assisted by unimaginable external forces to a great degree.

I will have genuine sympathy for any HBOS staff being misplaced. It is not their fault that their bosses steadfastly ” stuck to their knitting” in the UK during a decade in which the bank’s peer group were globalising their businesses and making themselves more resilient against singular mortgage asset disintegrations. Some wider revenue stream diversification might at least have seen their futures secured and in a way the greatest irony is that HBOS’ omnipotentence in mortgage lending also proved to be its Achilles’ heel.

The omens for HBOS staff and indeed mortgage intermediaries are mixed. Those staff that survive the rationalisation could actually be in a better place, emboldened by a 30 per cent market share, a well capitalised employer and a position in the value chain wherein the widened lending margins of recent months will see exceptional operating profits produced. Arch-combatant Abbey has been kidney-punching HBOS for the last 12 months but in what will now be a fairer contest, it will be interesting to see if Santander is up for a more prolonged scrap.

The HBOS brand vivisections will be fascinating. I hope and expect that Halifax and BM endure. Ask any intermediary in the land which two lenders over the past decade have consistently exceeded expectations, then it would surely be these two.

Elsewhere, Intelligent Finance’s fate may be more about when rather than if as Lloyds will want to protect some of its own proposition and the offset capability may end up sitting in C&G where incidentally the technology around Caseflow has progressively improved. It is also where the lender has recovered from its retraction from a local branch manager mandate policy which was hugely popular with brokers but which probably threw up occasionally toxic assets. Who knows, the technologies of Halifax and C&G may even be compatible.

With regards to the other brands, Scottish Widows is a respected IFA brand and will surely remain. What will be interesting will be Eric Daniels’ reassurance that Scottish jobs (did our beleaguered PM caveat this one I wonder ?) would be ringfenced because while Spearhead is modest, niche and easy to retain, Bank Of Scotland is probably the most vulnerable of all the protagonists.

In conclusion, I hope Daniels comes to value the huge intellectual capital inherent in HBOS ‘s mortgage disciplines. The credit card and savings businesses may be more homogenous but when he comes to select his Fantasy League line-up from across the new group’s brands, we do not want to see decisions of a moral hazard taken for the sake of Lloyds’ staff.

There has to be a meritocracy as brokers will not support a venture with such a market share unless it possesses the very best people.

Kevin Duffy is chief operating officer of mortgageforce

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