News Column

Investors sue over claimed total loss of pound(s)12bn

August 7, 2014

matt scuffham; matt scuffham

THOUSANDS of investors are suing Lloyds Banking Group over losses they suffered from the bank's takeover of HBOS during the 2008 financial crisis.

Lloyds Action Now, which comprises 7,500 litigants, lodged the American-style class action at the High Court in London yesterday.

The group claim to have lost a total of pound(s)12 billion as a result of the takeover making the claim potentially one of the biggest ever before the English courts.

Lloyds was bailed out to the tune of pound(s)20bn by the taxpayer after HBOS was caught out by a near-shutdown of the wholesale funding markets that it relied on more than rivals.

The shareholder action group confirmed it had launched proceedings against the bank and former directors including former chairman Sir Victor Blank and chief executive Eric Daniels.

The claim alleges vital information about the parlous state of HBOS was deliberately withheld from shareholders when they were asked to approve Lloyds' takeover of Britain's biggest mortgage lender.

It states that details of pound(s)25 billion of emergency funding provided to the bank by the Bank of England had been kept secret so HBOS could be kept afloat while the takeover by Lloyds was mounted.

Lloyds said it would defend the action. A spokesman said: "The group's position remains that we do not consider there to be any legal basis to the claims."

The part-taxpayer owned Royal Bank of Scotland is facing a similar action from investors who allege they were misled during an emergency cash call in 2008 and are claiming damages of around pound(s)4 billion.

The RBoS Action Group, which represents the largest group of shareholders, has already filed claims which could be for at least pound(s)1.2bn.

Former RBS boss Fred Goodwin had asked shareholders to provide pound(s)12bn at the height of the credit crisis to shore up the bank's capital position, which fell dangerously low after it paid a premium price for parts of Dutch peer ABN Amro and lost billions on US credit market assets.

For more stories on investments and markets, please see HispanicBusiness' Finance Channel

Source: Herald, The (Scotland)

Story Tools Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters