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Ex-Lloyds chiefs fight £550m legal claim over HBOS

Shareholders of Lloyds Banking Group push for compensation, claiming they were misled over ‘disastrous’ purchase of HBOS in 2008.

Ex-Lloyds chiefs fight £550m legal claim over HBOS

Shareholders of Lloyds Banking Group (LLOY) have pushed for £550 million in compensation, claiming they were misled over the ‘disastrous’ purchase of HBOS back in 2008.

The class action of around 6,000 shareholders alleges that five former Lloyds directors, including ex-CEO Eric Daniels, failed in their due diligence duties by advocating the deal.

‘We say shareholders were indeed mugged,’ said Richard Hill, acting for the shareholders,’ Reuters reports.

Hill argued that Lloyds used ‘spin and sales puff’ to push through the deal, glossing over HBOS’s liquidity problems and issues with its corporate loan portfolio.

He said the deal, completed in early 2009, was carried out under pressure from the government, but stressed that Lloyds’ directors’ loyalties should have been to shareholders.

Former chairman Victor Blank, ex-finance director Tim Tookey, Helen Weir, who was head of retail and ex-wholesale banking boss Truett Tate are the other defendants. They all deny any wrongdoing, as does Lloyds as a company.

The bank, whose lawyers are acting for the defendants, said in a statement: ‘The group’s position remains that we do not consider there to be any merit to these claims and we will robustly contest this legal action.’

The trial is scheduled to run for 14 days. In June, Royal Bank of Scoltand (RBS)  settled out of court with investors challenging the information around its 2008 rights issue.






17 comments so far. Why not have your say?

colin overton

Oct 19, 2017 at 10:57

The question remains why Lloyds bought HBOS if the board knew how bad the Scottish bank was?

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Oct 19, 2017 at 14:09

'The trial is scheduled to run for 14 days'.....erm, Bloomberg and other sources including The Guardian expect the case to run until early March next year. Or is it going to be 14 days and the remaining four months for the judge to consider his ruling?

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Oct 19, 2017 at 16:34

I believe that Gordon Brown, then PM, put serious pressure on Victor Blank to do the deal. That is why the shareholders are still nursing large losses having previously bought shares in what was regarded as a sound and conservative bank.

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Oct 19, 2017 at 16:35

Send the bloke to jail along with the Shredder from RBS.

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Oct 19, 2017 at 16:41

And if they win, who pays the £550m? If it's Lloyds then the present shareholders will lose out (some may the same as those claiming!) and might then have a claim !!

The money went to the HBOS shareholders and creditors, so to be equitable it is they who should pay.

This is a bit like RBS being fined by the government,

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Roger Lawson

Oct 19, 2017 at 16:47

Closing submissions, after witness cross-examinations, are not scheduled to take place until the 21st Feb 2018!

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Tony Peterson

Oct 19, 2017 at 17:46

Present Lloyds shareholders are carrying the can for criminality in HBOS Reading branch BEFORE LBG took it over!!! Surely the then HBOS board should be having their pensions seized over that one. Only Blank, Daniels and their incompetent board should be held to account today, along with the idiot fund managers who supported them (after a few free lunches)., at that autumn EGM in 2009. I was there. Spoke as forcefully as I could (as did many other individual investors), To no avail.

Many of the corporate idiocies that still happen are due to the far-too-cosy relationship between boards and their instiitutional investora,

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Tony Peterson

Oct 19, 2017 at 20:21

Further to the last I would be quite happy to give evidence. I have kept records of registered questions and subsequent newspaper cuttings.

I can actually demonstrate how terminally stupid the LBG board was in late 2008.

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Tony Peterson

Oct 19, 2017 at 20:27

By the way, in my first post I should correct "autumn 2009" - it was autumn 2008.

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Roger Lawson

Oct 19, 2017 at 20:37

Tony: if there is material there that you wish Harcus Sinclair to use in the court hearing, or in cross examination of witnesses, that they may not already have, please contact Edward Parkes on 020-7539-2915 pronto. Or you can contact me on 020-8295-0378 (I have provided a witness statement to the court for the litigants and am very familiar with the case).

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Andrew Stevenson

Oct 19, 2017 at 21:13

I forked out £30 or £40 for the group action over Railtrack. Which got absolutely no where. I think the courts and judges are not the least bit interested in so called 'justice', they do exactly what their 'establishment' pals tell them to do. I remember the Christine Keeler and Mandy Rice Davies trial. At one point Mandy Rice Davies said she was going abroad on holiday. There were absolutely no legal grounds for stopping her. The police scratched around and found she was buying a washing machine on hire purchase. They told the judge and he said that was grounds enough, and forbade her from leaving the country.

I am also a Lloyds shareholder but did not feel tempted to chuck more money down the drain. Blank and all his friends will walk away scot free (a little bit of investigation will probably find they all went to the same school as the judges).

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Roger Lawson

Oct 20, 2017 at 08:02

The Railtrack legal action was a very different legal claim from the current HBOS/Lloyds case. It was a claim against the Secretary of State for misfeasance in public office. The HBOS/Lloyds case is about omissions from the prospectus as required by the Financial Services and Markets Act. The Railtrack case was by its nature more problematic but Railtrack shareholders did get some compensation I believe due to kicking up a stink about the affair.

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Norman E

Oct 20, 2017 at 12:20

This case has much more in common with the RBS shareholders action than it does with Railtrack. RBS never went to court and the claimants will receive a settlement, albeit a poor one. The RBS case rested on particular legal grounds alleging breaches of the Companies and Markets Act. Had it gone to trial it was winnable, but RBS effectively divided up the litigents, settling with some and making it too expensive for the rest to continue to court. At least this case has actually reached the court but I have not followed it closely enough to know the exact legal basis of it. I hope however that the claimants win.

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Oct 20, 2017 at 13:26

the claimants should win easy... However if they get anything for having won is another matter entirely

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Norman E

Oct 20, 2017 at 13:45

mc2, I am not sure that a win is easy, as I think Lloyds would have settled as RBS did if they thought they stood little chance of winning. If they win the claimants will either be awarded damages, or there will be a further trial to determine the amount. lloyds could of course appeal, but they would need to have grounds. Some judgements cannot be appealed, as was the case with the Railtrack action.

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Oct 20, 2017 at 14:52

@Norman... thanks for your very valid points

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Oct 20, 2017 at 15:19

I was surprised that Lloyds decided not to settle, given the massive bad feeling generated by the actions of ‘banksters’ over the past decade, which can only be augmented by the likely disclosures during the trial. A £500M settlement might look like a cheap let-off in the months to come.

The ‘omissions from the prospectus’ mentioned earlier by Roger Lawson must surely include non-disclosure of the £25B loan from UK Gov and a further $18B from the US Federal reserve. I wonder how many of the 300 fund managers were aware of this before the EGM vote?

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