UK mortgage lender HBOS latest victim of financial crunch

LONDON, September 17, 2008 (AFP) – The global financial firestorm claimed a fresh victim Wednesday as top British mortgage lender HBOS said it was in takeover talks after a huge US bailout of insurer AIG helped underpin volatile share prices.

“In the light of market speculation, the Board of HBOS plc confirms that it is in advanced talks with Lloyds TSB Group plc which may or may not lead to an offer being made for HBOS,” HBOS said in a statement, confirming a report on the BBC.

The US Federal Reserve’s 85-billion-dollar loan to American International Group, one of the world’s largest insurers, meanwhile brought some relief to Asian and European exchanges.

European markets opened on a generally optimistic note after the mega rescue of AIG, yet another victim of the US sub-prime mortgage meltdown, but early gains on leading markets then switched to losses and back to gains.

London’s FTSE 100 index of leading shares also switched back and forth from gain to loss in a one-percent range and at mid-day was standing with a gain of 1.29 percent.

Indices moved sharply by the minute as the markets digested the AIG bailout, still anxious about the real state of the world financial system following the dramatic collapse on Monday