Lex, Autolease merger expected in 2009
18 September 2008
Author: Tristan Young
Leasing giants Lex and Autolease are expected to merge following the agreement of Autolease's parent bank Lloyds TSB to buy Lex's parent HBOS.
The merger of the fleet firms will create a leasing giant running more than 400,000 vehicles, putting it substantially ahead of any rival.
The overall takover will see Lloyds pay £12.2 billion for Halifax Bank of Scotland.
The merged bank is expected to make savings of £1bn by 2011. Reports in the national media have claimed this saving will lead to 40,000 job losses in the next two years.
Despite Lloyds TSB being the purchaser of HBOS, it is thought that in the car leasing arena Lex will be the lead partner as it is nearly twice the size of Lloyds TSB's Autolease business. Lex managing director Jon Walden refused to comment on this matter, but was positive about the overall deal.
Speaking exclusively to BusinessCar Walden said: "I had predicted the market would consolidate, and this is a further bringing to life of that idea.
"It is quite clear this deal has been put together quickly and is still subject to shareholder approval, which is not expected before the end of the year."
Walden questioned whether the people who'd done the banking deal had thought about the details of merging the leasing divisions.
"Nobody knows what's going to happen at the leasing company level; there's no plan squirreled away for a moment such as this.
"Consolidation is good for the customer because it will mean better capitalisation so we can provide better services. It will also create growth and job opportunities. Being more substantial in scale means being better able to provide these services. And our owners will be better funded to help our business."
He added that consolidation is being driven by two things:
"Firstly, innovation by participants in the industry. For example here at Lex we've led in white labelling deals with our Business Partner division and the HSBC deal.
"Secondly, consolidation is being driven by what's going on in the financial markets generally. We get swept up in that, it's an indirect trend from the banking industry."
Summing up, Walden added: "I think this is a terrific deal - it's created certainty where there was uncertainty for HBOS.
"It's got to be good news that it's been saved by a bank that's been well managed for a long time and has taken less risk. The cup's half full for me."
Lloyds TSB Autolease boss Nigel Stead added: "This is a great deal for all the parties concerned. However, there is still a lot of work to be done and a lot of decisions to be made."