HBOS: Breaking the bank

This BBC article describes a growth strategy chosen by one of the biggest UK banks. Read the article, and answer the following questions:

Level 1 - Knowledge
1a) Complete the following gap fill - This article describes a planned __________ _______ between Lloyds and HBOS : (horizontal/vertical/backward/forward) (merger/takeover)
1b) Use the information in the article to define the term ‘credit crunch”

Level 2 - Application
2a) Use the information in the article to construct a timeline of the factors that have resulted in the HBOS takeover by Lloyds

Summer 2008 <-------------------------------------------->Oct 2008

2b) Explain briefly how banks like HBOS make money, and my Lehnam brothers collapse caused problems for banks like HBOS
2c) Explain with a suitable diagram what impact this quote “believes big shareholders were getting out fast. “ would have on HBOS share price.

Level 3 - Analysis

3) Analyse the political, social, environmental and technical factors in this article.

Level 4 - Evaluation
4) Discuss the decision of the UK Prime Minister (Gordon Brown) who in being consulted on this situation “personally reassured Lloyds chairman, Victor Blank that competition rules could be bypassed in the national interest”

Note: Level 1 – Level 4 are questions based on IB standards where

• Level 1: Knowledge
• Level 2: Application
• Level 3: Analysis
• Level 4: Evaluation

Words in bold (define, explain…) have a specific meaning in the IB Diploma Program (DP). The meanings are in Glossary of Command Terms Section of the IBO DP Business and Management Guide available at the OCC and from my website