Lloyds TSB may be a takeover target -- by Wells Fargo |
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Fri, 26 Aug 2005 13:05
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LONDON: U.S. bank Wells Fargo & Co., is rumoured to be bidding for U.K. bank Lloyds TSB. The news ignited the stock market where Lloyds' scrip price went up by more than 2 per cent, sending it to the top of the FTSE 100 index Thursday.
The British bank's shares had dropped 4 per cent since July 29, after it announced that bad loan charges had gone up with more customers missing payments.
Lloyds TSB refused to comment on the speculation even as 33 million shares changed hands in a day on the London bourse almost matching an average 30-day volume of around 36 million.
Traders said the rumour originated from large scale trade of the scrip in the options market. More than 2,000 lots have been sold in the September 5 pound call options, at 40 pence above the share price.
Wells Fargo is the fifth-biggest U.S. bank and has a market value of about $101 billion. Its chief executive Richard Kovacevich had gone on record in the past that he is not interested in expanding abroad.
Lloyds TSB has an old Wells Fargo hand in a key position -- Terri Dial who heads the U.K. retail division. Traders speculate that she may be the broker in the acquisition plan.
Lloyds TSB is seen by analysts as the most vulnerable British bank to an overseas bid as it had sold all its international business and is focused on the domestic market. Most of its key management team members are recent entrants with little or no attachment to the organisation.
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