Scottish court sanctions Lloyds-HBOS scheme

LONDON (Reuters) - A Scottish court sanctioned the scheme to be used in Lloyds TSB's (LLOY.L) takeover of HBOS HBOS.L on Monday, clearing a final administrative hurdle for the government-brokered deal that will create a banking giant.

HBOS said in a statement the court had approved a scheme under which each class of preference shares issued by HBOS will be exchanged for a similar class of preference shares to be issued by Lloyds, under a so-called scheme of arrangement.

The merger will result in a financial services group controlling a third of all Britain's current accounts and 28 percent of the country's mortgages, and would under normal circumstances have been blocked by competition regulators.

The deal was brokered by the government in September after a dramatic slump in HBOS's share price threatened to undermine consumer confidence in the bank.

An HBOS spokesman said on Monday: "We welcome today's decision by the Court of Session. This is in the interests of shareholders and customers alike."

In separate statements, the banks said dealing in HBOS shares is expected to be suspended from 1:00 p.m. EST on Wednesday January 14, and its listing will be canceled at market open on Monday January 19.

(Reporting by Georgina Prodhan and Steve Slater)