Stress tested

The issue of the Lloyds – HBOS merger rumbles on, with revelations by Adair Turner, chairman of the FSA, that:

• HBOS could have been rescued with financial help from the Government and without merging with Lloyds; and
• both the FSA and the Treasury had known, from “stress testing” analysis carried out last October, that HBOS was heading for losses of the magnitude disclosed last week.

The disclosures will certainly put more pressure on Gordon Brown, who intervened in the merger to an extraordinary degree. 

And not only on Mr Brown.  Readers will recall that the HBOS rescue took place against the backdrop of the Glenrothes by-election, called after the death of the Labour MP, John MacDougall, on 13 August, 2008.  The election was held on 6 November, when Labour retained the seat with a remarkable and unexpected majority of 6,737.   Alistair Darling also put in his fourpence worth during the campaign, pleading for as many Scottish jobs as possible to be saved after the merger, and “making very clear” that HBOS’s HQ should remain in Edinburgh.

Mr Darling is MP for Edinburgh South West.