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I think the banks have been valued as if some of them will take the government up on their offer. In fact their is a good chance some off them will be able to borrow somewhere else as they have a back up of the government money if needed.
Plus my money is on the hbos and llyods tsb merger is a sham, it will never happen and is purely their to bulk up hbos and prevent it falling.
So I think hbos shares are looking very good if you are willing to hold them for a few years.