HBOS must renew £164bn in wholesale funding

HBOS is rumoured to have been in talks with major UK banks to arrange funding for over £160bn in wholesale capital that must be renewed in the next 12 months.

An industry insider says the lender was in talks with Lloyds TSB, HSBC and Barclays over the summer with regard to arranging capital to cover the sum.

He says: “It’s logical that HBOS and Lloyds would merge because Lloyds is the only major player with exposure minimal enough to prop up the market.

“Lloyds’ liquidity would be a perfect match for HBOS.”

HBOS is set to merge with Lloyds and says the figures regarding wholesale funding have been available for some time in the bank’s reports.

A spokesman says: “Wholesale funds valued at £164bn will mature within the next 12 months and so will need to be renewed.

“HBOS continues to access the wholesale money markets where appropriate. HBOS has taken a cautious view on the outlook for the securitisation markets for some time and has adapted its business plan accordingly.”

He adds: “HBOS has the strongest capital ratio, a key measure of financial strength, of all the major UK domestic banks.”