News Column

Lloyds joins RBS claims

May 22, 2014

By Rob Davies, Daily Mail, London

May 22--Lloyds Banking Group has joined a pounds sterling 5bn lawsuit against Royal Bank of Scotland, pitting the two taxpayer-backed banks against each other.

Insurance firms controlled by Lloyds lodged a pounds sterling 420m claim as part of a class action-style suit gathering together aggrieved private investors and institutions.

The RBS Shareholder Action Group claims the bank and its directors – including shamed former chief executive Fred Goodwin – misled them into buying shares in the bank's pounds sterling 12bn rights issue in 2008.

Its lawyers will argue that RBS (up 3.4p to 330.5p) played down the parlous state of its finances in the rights issue prospectus.

Those who bought into the cash call at pounds sterling 2 saw their stock collapse to 11p within months and are still sitting on huge losses.

While the wider Lloyds group (down 0.33p to 74.34p) is not suing RBS, nine of its insurance businesses including Scottish Widows and Clerical Medical are joining the action.

Investment managers are thought to have been aware of a legal opinion which suggested that institutions could themselves face legal action from their own investors if they failed to join a suit that later proved successful.

'The management in the relevant insurance businesses gave careful consideration as to whether it was in the interests of policyholders to join the legal proceedings and decided that it was in their best interests to do so,' said a Scottish Widows spokesman.


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Source: Daily Mail (London, England)

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