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Call to extend short-selling ban Lloyds move 'only show in town'
(39 minutes later)
First Minster Alex Salmond has called for the new ban on short-selling to be extended to ensure the process does not move beyond the financial sector. Scottish First Minister Alex Salmond has said he would be "encouraged" by any move from independent financiers to keep the bank HBOS in Scotland.
The Financial Services Authority clampdown came after the downfall of HBOS last week, in which short-selling had been held partly responsible. Lloyds TSB unveiled a £12.2bn takeover of Britain's biggest mortgage lender after HBOS shares plummeted.
The restriction only applies to 29 leading financial stocks. But Mr Salmond said his main focus was currently on the the Lloyds TSB offer, as it was the "only show in town".
Mr Salmond is also to meet with Lloyds TSB, which plans to take over HBOS, on Tuesday to argue for Scottish jobs. Financial experts also cast doubt over whether any move to keep part of HBOS in Scotland could work.
Lloyds TSB has said it will retain the HBOS headquarters on Edinburgh's Mound, as well as Scottish banknotes. Lloyds TSB has said it would retain the HBOS headquarters on Edinburgh's Mound, as well as Scottish banknotes.
However Mr Salmond wants the new firm to retain branch offices and key areas of decision-making in Scotland. This is a phenomenal deal for Lloyds TSB shareholders to buy such a famous bank as HBOS Martin GilbertAberdeen Asset Management
Scotland's oldest financial institution has been sacrificed and jeopardised for no good reason First Minister Alex Salmond However Mr Salmond said he wanted the new firm to retain branch offices and key areas of decision-making in Scotland.
He also said he had raised his concerns over short-selling in a letter to the FSA, asking it to broaden the restriction to include more firms. Commenting on reports that a group of Scottish banking elders may make a move to save the Bank of Scotland, the first minister told BBC Scotland's Politics Show: "I'd look at and am significantly encouraged by anyone who sees the importance of retaining jobs, investment, decision-making and control in the Scottish economy.
The FSA's ban is to remain in place until 16 January, though it will be reviewed in 30 days. "But the only show in town at the present moment is the Lloyds TSB bid for HBOS and Lloyds TSB are an excellent company with substantial Scottish roots."
"If this is an activity that is worth banning at least for the time being, then it's worth banning across the sectors," he said. He added: "The focus of most of my efforts is directed with that offer in mind, making sure that various commitments are honoured, because I have to mobilise the concern there is in Scotland to get the best possible outcome for the Scottish economy."
The first minister went on to criticise the role of Prime Minister Gordon Brown and Chancellor Alistair Darling in the demise of HBOS. 'Knockdown price'
"The circumstances of losing Scotland's second largest company should not have been allowed to happen and those that did allow it to happen, yes, are remiss in allowing it to take place." Martin Gilbert, chief executive of international investors Aberdeen Asset Management, said a move such as separating the corporate banking division and keeping it in Scotland was unlikely.
Market recovery "This is a phenomenal deal for Lloyds TSB shareholders to buy such a famous bank as HBOS, and they've got it at a knockdown price," he told BBC Scotland.
According to Mr Salmond, the immediate recovery in the markets after the short-selling ban showed the extent of its role in HBOS' collapse - HBOS shares were up 30% on Friday. Sir Peter Burt, a former Bank of Scotland governor, added that the company could become "unbalanced" without a corporate services division.
"Scotland's oldest financial institution has been sacrificed and jeopardised for no good reason," he said. He said other bidders for HBOS could yet come forward.
"If these measures had been taken timeously and early enough then I've absolutely no doubt HBOS would be looking forward to a great future as an independent banking organisation." UK Chancellor Alistair Darling has said he supported a takeover because the alternative was "just too awful to contemplate".
The first minister is also hosting a meeting of the Scottish Council for Development and Industry (SCDI) in Edinburgh on Monday.
Banking unions and other political parties will be among those invited.