Lloyds set to fight investors' legal threat
The taxpayer-backed bank is facing the threat of a massive compensation claim after lawyers for investor group Lloyds Action Now wrote to the Treasury, former Lloyds chairman Sir Victor Blank and current chief executive Eric Daniels alleging they were misled over HBOS's finances.
They believe the decision not to include details in the Lloyds takeover prospectus of a 25.4bn emergency Bank of England loan to HBOS meant that vital information was withheld.
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Hide AdLloyds shareholders have lost between 1.50 and 3 per share since the ill-fated HBOS deal and subsequent part-nationalisation of the bank – collectively seeing about 14bn wiped off the value of their shares.
Lloyds Action Now believes that investors have been left unfairly shouldering the burden of saving HBOS, which should have fallen more fairly on taxpayers in general, according to campaigners.
Lloyds Action Now is launching a nationwide campaign on tomorrow to recruit more of Lloyds's 800,000 shareholders to pursue a potential claim.
The group is holding the first in a series of regional meetings in Reading to boost its current membership of about 500.
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Hide AdJim Rai, head of litigation at Winckworth Sherwood, which is acting for Lloyds Action Now, said: "There can be no doubt that the fact of the 25.4bn loan 'of last resort' made by the Bank of England to keep HBOS afloat in October 2008, and before shareholders approved the merger a month later, was a misrepresentation of the facts and contrary to law."