Nov. 1 (Bloomberg) -- Lloyds TSB Group Plc, the U.K. bank that has agreed to take over mortgage lender HBOS Plc, may face competition from another suitor that has contacted the British government about a possible offer.

Scottish financier Jim Spowart contacted Scottish Secretary Jim Murphy this past week about ``another potential bid,'' the Scottish Office said in a statement in London today. For now, though, ``there is only one bid,'' it said.

``The Secretary of State said that if there were another firm bid, the Treasury would be happy to talk to them,'' the statement said, without giving further details.

The possible bidder is a European financial services company with ``worldwide reach,'' Spowart said, the British Broadcasting Corp. reported on its Web site today. There is ``genuine, genuine interest'' from the company, Spowart said, according to the BBC.

HBOS, based in Edinburgh, agreed to be bought in September after its shares plunged amid concerns with the company's access to cash as the credit crunch discouraged loans between banks. The takeover was backed by the government, which waived competition restrictions and agreed to underwrite a 17 billion-pound ($27 billion) share sale to boost capital at the combined company.

Lloyds TSB remains ``fully committed'' to the purchase, spokesman Leigh Calder said in a telephone interview, calling it ``a great deal for shareholders and all other stakeholders.'' HBOS spokesman Shane O'Riordain declined to comment.

HBOS's Board

A spokesman for the U.K. Treasury said that any potential bid is a matter for HBOS's board. He declined to be identified by name, in accord with departmental policy. The British government may end up with a stake of as much as 43 percent in a combined Lloyds TSB-HBOS after the share sale.

Under the original terms, Lloyds TSB would have swapped 0.83 of a share for each HBOS share, valuing the transaction at 12.2 billion pounds. The London-based bank reduced the bid to 0.605 of a share per HBOS share last month. The Scottish lender accepted the offer after its stock had plunged by almost half in a week.

HBOS has plunged 86 percent this year, valuing the company at 5.4 billion pounds. The shares rose 5.6 percent yesterday to 99.3 pence, valuing the stock at 2.22 times estimated earnings. Lloyds has dropped 58 percent, valuing the company at 12 billion pounds. The shares gained 0.2 percent yesterday to 197.8 pence, valuing the stock at 4.7 times estimated earnings.

Secretary of State for Business Peter Mandelson cleared the purchase yesterday, saying it's in the ``public interest.'' Mandelson also said the transaction would be free from scrutiny by the Competition Commission.

Spowart founded the Intelligent Finance telephone and Internet banking unit of HBOS. He also founded Standard Life Bank, a unit of Scotland's biggest insurer, in 1998. Between 1993 and 1997 he was managing director of Direct Line Financial Services, a telephone-based unit of Royal Bank of Scotland Group Plc, that he helped set up.

To contact the reporters on this story: Nandini Sukumar in London at nsukumar@bloomberg.net; Simon Thiel in London at sthiel1@bloomberg.net.

Last Updated: November 1, 2008 14:50 EDT