Lloyds agrees to buy HBOS in $22b deal

Lloyds TSB Group Plc agreed to buy HBOS Plc for about 12.2 billion pounds ($22.2 billion) as the government backed a deal to keep Britain's largest mortgage lender from succumbing to the worsening global credit crisis.

Lloyds TSB rose 2.4 percent yesterday in London trading after the UK's biggest provider of checking accounts said in a statement it will buy HBOS for 232 pence a share in stock, 58 percent more than Wednesday's closing price. Lloyds TSB Chief Executive Officer Eric Daniels, who will run the combined bank, told reporters yesterday it will sell assets to help fund the deal.

HBOS lost almost half its market value this week on concern the company would face a shortage of funds to back its loans, the same predicament that led to last year's government bailout of Northern Rock Plc.