The forthcoming merger of Halifax Bank of Scotland and Lloyds TSB will have an impact on millions of customers across all HBOS brands. On a practical level, what does it mean for you?
If you are a mortgage customer with Halifax...
There's no need to panic. In fact, one of the reasons Lloyds is interested in Halifax is because of its mortgage customers. Things should proceed for you as normal – you will continue making your monthly repayments to Halifax at the interest rate you had previously agreed on.
However, those looking to borrow may have some cause for concern. Firstly because the creation of a HBOS-Lloyds TSB 'super bank' will eliminate much of the competition in the mortgage market, which could have a negative effect on interest rates.
Secondly, while Halifax has been known for helping first-time buyers get a foot on the property ladder, Lloyds operates much more cautiously with regard to lending through its mortgaging brand, Cheltenham & Gloucester. It's likely that HBOS will also scale back its lending once owned by Lloyds.
If you have savings with Halifax...
Cautious savers will already know to keep no more than £35,000 in any one registered institution. This doesn't mean in one bank account, or even in one bank – because often many banks are owned by a 'parent' group, but are registered under the same name. For example, Intelligent Finance and St James's Place Bank are both operated by HBOS. Your protected savings will only amount to £35,000 in any one group.
Until the deal goes through (and this could take several months), the banks will continue to be treated as separate institutions, meaning that savings of up to £35,000 will be protected in each bank. Therefore there's no need to move funds unless you have over £35,000 in either HBOS or Lloyds, in which case it may be advisable to do so.
Will the deal go ahead?
Nothing is certain at this stage, and the Office of Fair Trading is likely to refer the deal to the Competition Commission.
A HBOS/Lloyds TSB 'super bank' would enjoy a third of the mortgage market, a quarter of the savings market and almost as much of the credit card market. The Competition Commission could block this move, which if it went ahead would make HBOS/Lloyds TSB the UK's largest bank by far.
However, it's likely that the government will apply pressure to waive the competition rules and allow the Halifax/Lloyds merger to move ahead.