Announcement came after a third disastrous day of trading in HBOS shares. HBOS dropped 19% during the day from 182 to 147. HBOS was admitted to trading on 10 September 2001. The government instigated Lloyds TSB to take HBOS under its wing, acting quicker than it did in last year's Northern Rock crisis. Merging the two will create the UK's fourth largest bank by assets.
Barclays takeover of Lehman North America ($1.5bn for the real estate and $250m for the business) was announced. The advisers on the deal, according to Bloomberg, were Credit Suisse Group AG, Deutsche Bank AG and JP Morgan Cazenove Ltd.
The cost of credit protection on Morgan Stanley's debt has accelerated over the last two days. Morgan's stock price is down 46% this year. They are rumoured to be mulling a merger (with Wachovia). The credit crisis has meant the financial landscape is changing fast. There is huge consolidation in the banking sector. Recent turbulence suggests the market will head towards more regulation, particularly of hedge funds, and more limits on risk taking and leverage.
Market virus.
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