French banking group Credit Lyonnais yesterday threw its weight behind a possible merger between HSBC Holdings and giant British bank Lloyds TSB, calling it 'the banking deal of the decade'.
In its latest 'Banknotes' publication, Credit Lyonnais said the combination would be perfect for both groups' strategies, giving HSBC 'extra fire-power to exploit opportunities in the Far East', while Lloyds would have the chance to deploy its capital 'for ongoing super-normal profits'.
The note followed the Asian crisis-induced HSBC share price slump. Analysts have become increasingly concerned that the group was not spread diversely enough to hedge against the sharp downturn in the region.
Credit Lyonnais said the dive in the price meant HSBC shares had reached a level where Lloyds could make a bid and add value.
Price was expected to be critical to any outcome of discussion, but if there was no agreement Lloyds could launch a hostile bid.
Credit Lyonnais said a GBP16 (about HK$202) per share offer would add value to its shareholders and offer growth potential.
