By Jodie Ginsberg and Steve Slater
LONDON, Nov 8 (Reuters) - Britain's biggest home lender HBOS rejected on Saturday a proposal from the former heads of Royal Bank of Scotland and Bank of Scotland to block its government-brokered takeover by Lloyds TSB.
Peter Burt and George Mathewson want to step in to replace the current HBOS chief executive and chairman, the BBC said, and believe the bank can survive as a stand-alone business now the British government has moved to recapitalise banks.
HBOS confirmed it had received a letter from the two men but said it contained no concrete proposals.
HBOS spokesman Shane O'Riordain said late on Saturday: 'We have written back to messrs Burt and Mathewson (and told them) the board has unanimously concluded that your letter does not form the basis for any further discussions between us.'
Burt was chief executive of Bank of Scotland when it merged with Halifax to form HBOS in 2001. Mathewson was previously chief executive and then chairman of RBS.
'It is our intention to create a detailed alternative plan that we believe will represent better value for both the HBOS shareholders and stakeholders alike by keeping HBOS as an independent bank,' the BBC quotes the letter as saying.
'We note that the letter does not contain any alternative proposal or a substantive bid for HBOS,' O'Riordain said earlier.
The letter did not address the funding issues that all major banks are currently seeking to manage, he added.
'The letter from Burt and Mathewson assumes the government would agree to a recapitalisation with them in charge. Messrs Burt and Mathewson have not given any certainty in their letter, however, that this would actually be the case.'
OPPOSITION
Britain unveiled a 37 billion pound ($58.06 billion) plan last month to recapitalise some of the UK's biggest banks that will see the government take stakes in the institutions involved, including RBS and the merged HBOS-Lloyds.
HBOS agreed to the offer by Lloyds after its share price was ravaged by the global financial crisis and concerns over its exposure to the weakening British housing market.
But the takeover -- and the prospect of the government becoming a major shareholder in Scotland's two top banks -- have become a major issue there.
Last week, HBOS accused a Scottish lawmaker of treating the bank as a 'political plaything' after he said a rival bid to its planned takeover by Lloyds could emerge within a week.
Alex Neil, a member of the Scottish parliament, said he was 'very, very confident' a second bid would be unveiled before the end of next week.
Neil has declined to name the possible bidder or give details about their potential offer. He described the suitor only as a 'financial institution with a global reach'.
Burt and Mathewson were instrumental in setting up HBOS and RBS in their current forms, models that have faced difficulties since the credit crunch given their use of wholesale funding.
Lloyds has said it expects to complete its takeover of HBOS and a rise in capital by January, after giving shareholders a vote on both in the third week of November.
Lloyds cut its offer price after the government bailout and is now offering 0.605 of its shares per HBOS share, down from 0.833 originally.
(Editing by Michael Roddy) ($1=.6373 Pound) Keywords: HBOS LETTER/ (Reporting by Jodie Ginsberg; Reuters Messaging: jodie.ginsberg.reuters.com@reuters.net, tel:+44 207 542 9053) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
LONDON, Nov 8 (Reuters) - Britain's biggest home lender HBOS rejected on Saturday a proposal from the former heads of Royal Bank of Scotland and Bank of Scotland to block its government-brokered takeover by Lloyds TSB.
Peter Burt and George Mathewson want to step in to replace the current HBOS chief executive and chairman, the BBC said, and believe the bank can survive as a stand-alone business now the British government has moved to recapitalise banks.
HBOS confirmed it had received a letter from the two men but said it contained no concrete proposals.
HBOS spokesman Shane O'Riordain said late on Saturday: 'We have written back to messrs Burt and Mathewson (and told them) the board has unanimously concluded that your letter does not form the basis for any further discussions between us.'
Burt was chief executive of Bank of Scotland when it merged with Halifax to form HBOS in 2001. Mathewson was previously chief executive and then chairman of RBS.
'It is our intention to create a detailed alternative plan that we believe will represent better value for both the HBOS shareholders and stakeholders alike by keeping HBOS as an independent bank,' the BBC quotes the letter as saying.
'We note that the letter does not contain any alternative proposal or a substantive bid for HBOS,' O'Riordain said earlier.
The letter did not address the funding issues that all major banks are currently seeking to manage, he added.
'The letter from Burt and Mathewson assumes the government would agree to a recapitalisation with them in charge. Messrs Burt and Mathewson have not given any certainty in their letter, however, that this would actually be the case.'
OPPOSITION
Britain unveiled a 37 billion pound ($58.06 billion) plan last month to recapitalise some of the UK's biggest banks that will see the government take stakes in the institutions involved, including RBS and the merged HBOS-Lloyds.
HBOS agreed to the offer by Lloyds after its share price was ravaged by the global financial crisis and concerns over its exposure to the weakening British housing market.
But the takeover -- and the prospect of the government becoming a major shareholder in Scotland's two top banks -- have become a major issue there.
Last week, HBOS accused a Scottish lawmaker of treating the bank as a 'political plaything' after he said a rival bid to its planned takeover by Lloyds could emerge within a week.
Alex Neil, a member of the Scottish parliament, said he was 'very, very confident' a second bid would be unveiled before the end of next week.
Neil has declined to name the possible bidder or give details about their potential offer. He described the suitor only as a 'financial institution with a global reach'.
Burt and Mathewson were instrumental in setting up HBOS and RBS in their current forms, models that have faced difficulties since the credit crunch given their use of wholesale funding.
Lloyds has said it expects to complete its takeover of HBOS and a rise in capital by January, after giving shareholders a vote on both in the third week of November.
Lloyds cut its offer price after the government bailout and is now offering 0.605 of its shares per HBOS share, down from 0.833 originally.
(Editing by Michael Roddy) ($1=.6373 Pound) Keywords: HBOS LETTER/ (Reporting by Jodie Ginsberg; Reuters Messaging: jodie.ginsberg.reuters.com@reuters.net, tel:+44 207 542 9053) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.