Can banks de-merge?

[glazbagun]

This whole Lloyds/HBOS thing has me wondering- do the shareholders of both now own Lloyds-HBOS shares, or their originals? In either case, could Lloyds not create a company called, I dont know... HBOS, say; load it with bad debt and float it on the stock exchange for a value of 50p?

[RJE1966]

NO.

[siscar]

Yes banks and other companies can demerge, it's not uncommon for a company to split itself up or to sell parts of it's business.

But you can only sell what someone will buy, in your scenario nobody is going to underwrite the new company and nobody is going to buy it and you can't just split it out then close it down.

[Fittster]

Would that be in effect the creation of a Bad Bank that is the next idea to save the world?

[AstonZagato]

To sell it for 50p, it would have to be worth at least 50p (and probably more as buyers would be suspicious even at a low valuation). Furthermore, the Directors would have to sign off the prospectus saying the compay was a going concern. So they couldn't make it worthless by loading it with toxic assets and sell it. They could split the bank in two and give the shares to their shareholders (so instead of owning one share of Lloyds, you'd own one share of Lloyds and one of HBOS). However, to split the company, they'd have to make sure that both sides were going concerns.

The only way they can create a "good bank / bad bank" is to find someone willing to take the bad bank from them. And that would be the poor old tax payers.

[Chrisgr31]

I wonder if any of the Directors, advisers etc will bve sued by disgruntled Lloyds bank shareholders. Lloyds bank may have moved in to difficulty with the crunch but it seems to be far deeper in the st than it was before it merged with HBOS.

Same I guess for those that have bought shares in some of the rights issues for these banks, they must e narked!