FRESH doubts have emerged over the takeover of HBoS today after its share price continued to take a pounding on the markets.
Shares in HBoS and Lloyds TSB, as well as Royal Bank of Scotland, have continued to suffer volatility despite UK stock markets picking up since the terms of the £37 billion bail-out were announced.
The drop in prices has been blamed on investors b
eing repelled by the Government's insistence that no bank that receives funds will pay shareholders a dividend until they have fully repaid preference shares.
It is understood the banks are telling the Government that the terms will force banks to rein in lending.
Analysts say that, despite the terms being renegotiated earlier this week, the HBoS deal remains "very unattractive" to Lloyds shareholders.
Lloyds chief executive Eric Daniels insisted the deal will still go through – with the only alternative being nationalisation of HBoS. He said: "It had a busted business proposition. If we get out of the current malaise you just will not be able to do that anymore.
"It's in the national interest that it is not nationalised and sold off. That's not a very efficient way to go - everyone would like to see this (deal) happen."
His comments come after Prime Minister Gordon Brown indicated that he considered the takeover a done deal.
But analysts are still uncertain after HBoS shares plunged to 85.3p, compared to 905p only a year ago.
Meanwhile, Scottish-born former Australia and New Zealand Bank chief executive John McFarlane is reportedly being lined up as Sir Tom Mckillop's replacement as chairman of RBS.
Sir Tom is to retire in April and there is growing pressure on the bank to announce his successor as soon as possible.
Today ministers will hold talks on the Icelandic banking crisis which put more than £45 million of Scottish taxpayers' money at risk.
Secretary of State for Scotland Jim Murphy and Treasury officials will meet Scottish Government finance minister John Swinney and council representatives Cosla in Edinburgh.
The ministers were expected to issue a statement following the talks at the Scotland Office.
The full article contains 359 words and appears in Edinburgh Evening News newspaper.
