Lloyds and HBOS sign £12billion deal

Last week started badly for many, as thousands of employees lost their jobs due to the fall of the famous Lehman Brother investment bank after they declared themselves bankrupt.

The bank had been operating for over 150 years before they fell victim to the current financial situation that is showing its affect across the globe.

Before the papers had time to shed light on this event, Bank of America bought one of Wall Street's most well know banks, Merril Lynch, in what has been reported to have been a 'rescue mission'. Meanwhile American International Group, Inc. (AIG), a world leader in insurance and financial services had to be aided $85billion by the US Federal Reserve.

American wasn't the only ones to feel the heat, as the Bank of England put £5billion into the markets, while the European Central Bank a further €30billion.

HBOS, the owner of The Bank of Scotland and Halifax was not so lucky as their shares plummeted to the point where they were forced to accept a takeover deal offered by one of the UK's leading banks Lloyds TSB.

Had things not have been so desperate, it is unlikely the competition authorities would have approved the merger of the two banks. HBOS was the UKs largest mortgage lender, and Lloyds TSB leading current accounts. However, due to the implications that would have come with the collapse of HBOS, the deal was completed speedily creating a giant bank worth £30billion.

Lloyds chairman Sir Victor Blank commented:"This will be a unique opportunity to accelerate and extend our strategy and create the UK's leading financial services group," HBOS chairman Dennis Stevenson added: "This is the right transaction for HBOS and its shareholders."

One of the things that contributed to the problems encountered by HBOS was thought to be share traders, known for buying and selling shares in an attempt to make money fast.

However, the Financial Services Authority has now attempted to prevent any other financial services firms from getting themselves into similar situations as HBOS by bringing in a temporary ban on the short selling of 29 stocks.

These steps may or may not prevent any further catastrophes, but one thing is certain, that the globes financial services industry has changed forever.

It is expected that lenders will now become much more selective about the people they approve credit to in the form of credit cards, loans and mortgages. The movement in the financial market may cause people to switch savings accounts and move savings to give them peace of mind.