Lloyds HBOS is Born - One Extraordinary Day

Days like today come along very rarely in the business world. A day when events at HBOS moved at astonishing speed and the financial media struggled to keep up with developments. All, that is, except for one man - Robert Peston

Peston is developing a reputation for breaking the biggest business stories, and he landed a whopper this morning when he announced via his blog that HBOS was in “merger” (i.e. takeover) talks with Lloyds TSB. Throughout the day, Peston kept the financial world informed about developments in the negotiations - he always seemed a step ahead of everyone else, including the Stock Exchange regulatory news service.

In the case of HBOS, my view is that Peston’s insider knowledge actually helped the situation. I’m convinced that had he not announced the potential deal, we would have seen a run on the bank today. He has already disclosed that the reason HBOS had to move so quickly was that lenders and depositors were withdrawing cash from HBOS at an alarming rate. A run on HBOS would have made Northern Rock seem like a little local difficulty by comparison!

So the deal is done (according to Peston at 9.14 tonight.

Some in the investment banking and regulatory world will probably be more than annoyed that a business reporter from the BBC should have such strong insider knowledge of this deal. Whoever was feeding Peston the knowledge last night and today was clearly in a very senior position either at HBOS, Lloyds-TSB, the FSA or one of the accounting or legal firms who would have been advising the two boards. Perhaps it was a Board member himself - though I doubt that.

Hats off to Robert Peston though - he held our attention throughout a momentous and gripping day.

Tomorrow might just seem a little less exciting, though you never know.

I wonder whether the attention will now shift for the remainder of the week (and the weekend ahead) to the last two big investment banks standing - Goldman Sachs and Morgan Stanley. Surely they can’t be next, can they?