UK - Trustees of the HBOS Final Salary Pension Scheme (FSPS) have asked a court to delay the takeover of its sponsoring employer by Lloyds TSB.
The trustees said they "reluctantly" decided to ask the Court of Session in Edinburgh - which has to approve the Scheme of Arrangement proposed by HBOS if the acquisition by Lloyds TSB is to be completed - not to give its approval until "appropriate arrangements" are made to ensure the security of the FSPS.
They added they remained concerned at "the failure of Lloyds TSB to make substantive proposals to put the FSPS on a secure footing following the deterioration in quality of the support provided by HBOS itself".
While they acknowledged the "commercial basis" underpinning the acquisition and did not oppose it, they said it was fundamental that "appropriate arrangements" were made to protect the accrued benefits of FSPS members.
The deal has been approved the majority of shareholders at both banks, but the law grants the right to potential creditors such as the pension scheme to challenge the scheme of arrangement. The trustees are acting in this capacity.
Since the acquisition was announced, they said they had sought engagement with Lloyds TSB, but failed to receive details from Lloyds TSB of what it was planning to do to underpin the HBOS covenant.
In addition, the trustees decided to commission an actuarial valuation as at 31 December 31 2008, which is a year earlier it was expected, considering a reappraisal was needed given the upcoming merger.
The court's hearing will be held on 12 January 2009.
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