Case brought by Lloyds shareholders is ‘fundamentally flawed’

Lloyds bank in Halifax
Lloyds bank in Halifax

A multi-million-pound case brought by Lloyds shareholders over the acquisition of HBOS is “fundamentally flawed at every level”, the High Court has heard.

A group of 5,803 former Lloyds TSB shareholders claim they were “mugged” when the bank recommended the January 2009 deal without disclosing HBOS’s true financial state.

They are suing Lloyds Banking Group, former chairman Sir Victor Blank, ex-chief executive Eric Daniels, former chief financial officer Tim Tookey, one-time director of retail banking Helen Weir, and ex-director of wholesale banking George Truett Tate over alleged losses of more than £550m.

Richard Hill QC has said the directors recommended the “disastrous” acquisition when, based on information they had, no reasonable director would have done so.

They knew that HBOS - which had major corporate centres at Tinity Road, Halifax, and Copley - had suffered a funding failure, could not meet its obligations and was on “emergency life support” from the Bank of England and Lloyds.

He alleged they “rushed” into agreeing the deal without any proper analysis and the circular sent to shareholders deciding how to vote was a “highly misleading” document.

The acquisition left Lloyds saddled with toxic assets and it was later forced to take a Government bailout worth £20.3bn, which has been blamed in part on the takeover.

Lloyds Banking Group, which was formed from the merge of Lloyds and HBOS, employs around 6,000 people in Calderdale.

The trial continues