WITH its imposing headquarters on The Mound standing as a symbol of its prosperity and prestige, HBOS was without doubt one of the icons of Edinburgh's once-buoyant financial services sector.
Alongside arch rival the Royal Bank of Scotland, it was one of the twin powerhouses which established the Capital as one of Europe's leading financial cities, able to punch well above its weight.
But from the end of tomorrow, HBOS will exist no mo
re, with its shares being suspended and the final touches being put to the creation of the new "superbank" formed by the takeover of HBOS by Lloyds TSB.
While the new Lloyds Banking Group, which will begin its life on Monday, will have substantial operations in Edinburgh – including its Scottish headquarters – the city will be stripped of an international HQ, which will instead be based in London.
The new group will have more than 12,000 staff based in the Capital at its Bank of Scotland, Lloyds TSB Scotland and Scottish Widows brands, easily making it the city's biggest private sector employer.
Each one of those employees – collectively they amount to two in every five people working in the banking, insurance or finance sectors in Edinburgh – will be fearing what ill-winds will sweep their way in the coming turbulent months.
As the integration of the brands takes shape, it is almost inevitable that, as with any takeover, there will be heavy job losses. The head office functions, many of which are in the city, are likely to be hardest hit as the new group sets about integrating roles that are duplicated.
Scores of existing Lloyds TSB and Bank of Scotland branches are also expected to be closed, and the axe is likely to first fall where there are currently two branches close together.
Some estimates say 40,000 jobs could be lost, although Lloyds chief executive Eric Daniels has previously refuted this figure.
The impact on jobs and on the economy and standing of Edinburgh remains a concern to business leaders.
"Clearly there is going to be a reappraisal when the two banks come together and inevitably that will mean rationalisation," says Graham Birse, deputy chief executive at Edinburgh Chamber of Commerce.
"These are unique circumstances in which the independence of Bank of Scotland was almost lost in a period of two weeks last year," he says.
He feels there are grounds for some guarded optimism though, thanks to the decision to maintain at least some kind of head office function in Edinburgh.
"Together, the corporate functions of Bank of Scotland and Lloyds TSB will make a very powerful player in the Scottish market," he says.
The new group is today facing calls to end the uncertainty surrounding the future of its staff and tell them what happens next. Tavish Scott, leader of the Liberal Democrats in Scotland, says: "As their takeover reaches the final stage, Lloyds' bosses must come clean about how many jobs will go in Scotland as a result.
"The Prime Minister is holding talks about measures to safeguard jobs during the recession. Yet, his government refused to step in and save HBOS, thousands of banking jobs and competition on the high street. This deal is bad news for jobs and competition in Scotland."
Although there has been something of a cull of the much-criticised HBOS board, with no place in the new company for chief executive Andy Hornby and chairman Dennis Stevenson, Lloyds TSB has placed clear value on the HBOS operations.
In particular, Bank of Scotland will become the retail trading name of the new group in Scotland, replacing the Lloyds TSB brand above the door of local branches, which will slowly be phased out in a process expected to take up to three years.
Bank of Scotland Corporate will also survive in Scotland, although it is not yet known what will happen to its operations elsewhere in the UK.
One encouraging sign is the number of appointments of well-known Scottish figures. These include Lloyds TSB Scotland chief executive Susan Rice, who becomes managing director of the new Lloyds Banking Group in Scotland, which will be responsible for Bank of Scotland and its integration, and Scottish Widows chief executive Archie Kane, who has also been given the key role of group executive director of insurance.
Only when the markets open next Monday and investors get their first chance to buy shares in the new Lloyds Banking Group will we get a real indication of whether there is confidence about the new company.
In what are extremely challenging times for financial services, the whole of Edinburgh needs to be holding its breath, hoping the deal does not ultimately tarnish the city's position as a centre of banking excellence.
Iain Ferguson, a policy executive for CBI Scotland, says: "It is important to remember that Edinburgh has always commanded an excellent reputation within this global industry due to the talents of those working within the city and this, I'm sure, will continue."
It is to be hoped that his confidence is well placed.
The full article contains 854 words and appears in Edinburgh Evening News newspaper.
