Britain in talks with financier over possible rival bid for HBOS

LONDON (AFP) – Britain confirmed Saturday it is in talks with a Scottish businessman over a possible rival bid for HBOS, the British banking group hit hard by the subprime crisis.

The announcement came a day after Business Secretary Peter Mandelson cleared the takeover of HBOS -- parent of Bank of Scotland and the Halifax bank -- by rival Lloyds TSB despite competition concerns.

Scottish Secretary Jim Murphy said Saturday he would be meeting with Jim Spowart, creator of HBOS-owned online bank Intelligent Finance, on the matter and had raised the idea of a new bid with the Treasury.

"I have spoken to the Treasury and if there is a second serious bid then the Treasury would be happy to talk to them," he said. The Treasury declined to comment.

The British government has a stake in HBOS, which has its corporate headquarters in the Scottish capital Edinburgh, after it balied out the bank last month.

Earlier, Spowart told the Scotsman newspaper there was "a possibility that a financial services organisation has expressed an interest in making an approach" to HBOS.

"This came as a result of a merchant banker approaching me and I thought, given what I had learnt, I should alert the government," he told the Edinburgh newspaper.

Spowart said the talks were "at a very early stage", but later told the BBC: "This is a genuine, genuine interest."

He said the new bid "would keep the bank more or less intact".

"I can't guarantee the situation on jobs but I don't think there would be job cull at the same level as what is currently estimated or anticipated by Lloyds TSB," he said.

Lloyds TSB agreed to buy HBOS in September as the banking group faced collapse owing to massive write-downs caused by the US subprime mortgage crisis and the ensuing global financial crisis.

The deal, agreed with the support of the British government, was worth 9.8 billion pounds (12.5 billion euros, 15.8 billion dollars) -- about 187 pence per HBOS share.

On Friday, Lord Mandelson said he would not refer the deal to competition watchdogs because "the possible anti-competitive effects ... are outweighed by the public interest in preserving the stability of the UK financial system".