Lloyds accused of withholding information during HBOS takeover

Investors have filed a lawsuit against Lloyds Banking Group, which they say withheld important information during its takeover of HSBC in 2008.

 

The claimants, who own a 25 per cent stake in the bank, allege that the true financial health of HBOS was hidden from them during the government-backed takeover at the height of the financial crisis.

 

They say that as a result they agreed to the merger without having all the necessary information at hand. 

 

In particular, they say that they did not know about £25bn worth of emergency support given to HBOS by the Bank of England, or about $18bn given to them by the US Federal Reserve. They also claim that Lloyds gave HBOS £10bn in secret so that it would stay afloat.

 

The shareholders have united against the bank by forming the Lloyds Action Now shareholder group, and are seeking a group litigation order. 

 

If the order is approved, many more shareholders would have the opportunity to join, and this could raise the value of the claim to £12bn. It could become one of the biggest claims to ever be heard by an English court, according to the FT.

 

Lloyds has vowed to defend itself, however. In a statement, it said: “The group’s position remains that we do not consider there to be any legal basis to these claims and we will robustly contest this legal action.”