Mergers bring further change to UK mortgage market.

The merger this week of Lloyds TSB and the HBoS group has created a super lender controlling around 28% of the mortgage market, 1 in 3 current accounts and 1 in 5 credit cards.

The business is over 40% owned by the taxpayer after shareholders spurned the opportunity to invest in the £13 billion share offer. It will be called Lloyds Banking Group but will continue to operate the separate brands.

Following a number of mergers last year, including Abbey owner Santander taking over A&L, there is some concern over a reduction in competition and the reduced choice for consumers.

The joint press release from both Lloyds TSB and HBoS countered this, saying, “The aim of Lloyds Banking Group is to be the leading financial services organisation in the UK. Bringing the two banks together will strengthen our ability to provide excellent customer service and great value products”.

Britannia Building Society and Co-op Financial Services have also announced merger proposals, having first made their intentions public last year.

The lenders have described their merger as the creation of a £70 billion ‘super-mutual’, which would be a “strong, fair and ethical alternative to banking plcs”.

To complete the deal will require a change in the law to allow a merger of different types of mutual organisations. The law change is expected to be passed in March with the deal concluding in the summer.

The new business will continue to trade under the the separate brands but will move quickly to a single product range.

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