Banking

Lloyds’ agreed £12bn rescue plan for HBOS (LSE: HBOS.L - news) has attracted praise and criticism in equal share. After three days of turmoil in the financial markets threatened HBOS viability, the speedy takeover was welcomed by some as a necessary way of forestalling a run on the bank, and restoring some confidence in UK financial institutions. Graham Spooner, investment adviser at The Share Centre said:  ”The merger between Lloyds TSB and HBOS should help bring some much needed stability to the financial sector, and will no doubt alleviate fears of a collapse for HBOS shareholders. We also expect the deal to improve confidence among customers and investors in the UK financial sector.” HBOS shares rose 54% to 227p on the back of the takeover announcement. Lloyds shares fell initially but recovered and rose 18% to 300p. However, some investors expressed concern. Richard Buxton, head of equities at Schroders (LSE: SDR.L - news) , which owns a 2% stake in HBOS, said: Why does this need to happen? The Bank (TBHS - news) of Englands special Liquidity Scheme buys HBOS time. How does the deal benefit shareholders in HBOS and what if the short sellers turn onto Lloyds and then other banks?