Financial Markets

My Lords, I am inclined to think that a few minutes is a long time in banking. I am sure that when the Prime Minister tapped Lloyds TSB on the shoulder and said that it would be rather helpful if it could merge with Halifax Bank of Scotland, he did not appreciate that only a few weeks later, a much bigger lifeboat would be required. I am somewhat mystified. My question relates to paragraphs 35 to 38 in the copy of the Statement. In the case of Lloyds TSB and HBOS, the Statement says that, "““the Government will purchase both ordinary and preference shares once the merger is complete””." It goes on to say that HBOS will get so much and Lloyds will get so much. However, if the purchase of shares is to take place when the merger is complete, you will not end up with shares in HBOS and shares in Lloyds TSB; you will possibly end up with shares in Lloyds TSB HBOS plc. What are the Government saying, or are they keeping their options open? The statement a few weeks ago about the merger was one thing, but the Government are now having to come with this great new lifeboat for the organisation that was going to help HBOS. Are we absolutely certain that, in the reality of what the Government are now proposing with this bigger lifeboat, the merger is necessary? Paragraph 48 of the Statement says that, "““more capital is available to small institutions””," but earlier in the Statement there is talk about the Nationwide Building Society increasing its capital base. No doubt one of the reasons why Nationwide wants its capital base to be extended is that it wants to take over two smaller building societies. Again, is there a need for that? Given the competition rules, is all this merger mania now required?