British Bank Buys Rival To Help Calm Jitters

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The financial trouble is shaking up Britain's banking industry, and the British bank Lloyds announced that it is buying one of its rivals, Halifax Bank of Scotland, known as HBOS, for $22 billion. Politicians and bankers hope the deal will help calm the British markets, as NPR's Rob Gifford reports from London.

ROB GIFFORD: If any proof were needed that the financial crisis is indeed global, it came this morning with confirmation that Britain's largest mortgage provider HBOS has been taken over by Lloyds TSB. The move came after HBOS's shares had plummeted this week on the London Stock Exchange amid fears that it was too exposed to the falling British housing market. Analysts say the government did not want to find itself having to intervene to save HBOS as the U.S. government had with insurance giant AIG, and so government officials helped facilitate the deal.

The new bank will hold a third of all British mortgages, a slice of the pie that in normal times would raise serious concerns about market competition. But these are not normal times. The government has said it will allow the merger, Britain's Finance Minister Alistair Darling saying this morning that financial stability must trump competition fears. Lloyds TSB confirmed that some of the 145,000 jobs at the two banks could be at risk, but denied reports that it would be as many as 40,000 who face the axe. Rob Gifford, NPR News, London.

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