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Lloyds defends HBOS takeover as shareholders launch £14bn claim

(Update) Shareholder action group launches claim for losses incurred after the acquisition of HBOS - but Lloyds says shareholders will win in the long run.  

 
Lloyds defends HBOS takeover as shareholders launch £14bn claim

Lloyds has defended its decision to buy HBOS at the peak of the financial crisis saying shareholders will eventually reap the benefits.

'We believe that the acquisition will deliver significant benefits for our shareholders in the medium to long term. We have a clear strategy in place and are already demonstrating significant progress. We will robustly defend the group’s position in the event of legal action,' a spokesman said.

The comments came after a group of shareholders launched a £14 billion claim against the company over the weekend, saying they were not told the full extent of the financial problems at HBOS when Lloyds bought the bank in 2008.

Lloyds Action Now (LAN) is an association set up by shareholders for shareholders to recover investment losses as a result of the merger of Lloyds TSB Bank with HBOS.

Over the weekend, the group sent letters to the Treasury and to chief executive Eric Daniels and former chairman Sir Victor Blank claiming compensation for investors it says were lured into voting for the 2008 takeover without being told the Bank of England had made emergency loans to HBOS of around £25.4billion. 

The group said: 'We now know Lloyd’s directors and advisors, the Government, the Financial Services Authority and the Bank of England (and advisors) were fully aware of the effective bankruptcy of HBoS before the merger but nevertheless promoted it.'

The group said the details of the loan were deliberately withheld from ordinary shareholders.

The group has taken legal advice from leading counsel and experts in the European Court who agree that shareholders have excellent grounds to recover their losses.

But the Lloyds spokesman said the group provided thorough and appropriate information to shareholders about the finances of both HBOS and Lloyds, including the general use of government backed schemes.

'We disclosed the fact of the support. We disclosed the fact that it was significant. We disclosed the fact that if such support was not available, there would be a material impact on the solvency of the business. That was, in the view of the Board, through and appropriate disclosure,' he said.

LAN is one of a number of shareholder action groups promising to pursue the company and the government over the disastrous effect of the acquisition on shareholders.

LAN claims around 800,000 individual shareholders lost money as the bad loans at HBOS took their toll on Lloyd’s profits.

Shareholders have also had to forego dividend payments until 2012 as a condition of European Union approval for the deal.

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24 comments so far. Why not have your say?

Chuck

Jun 07, 2010 at 09:23

Good on these shareholders. Everyone else is being bailed out for their financial mistakes/greed, why not these guys too?

The UK tax payer should pay the Lloyds shareholders who were duped into voting for the takeover. How could they have guessed that one of the largest mortgages lenders in the UK might have had bad loans after a 10year housing bubble, in the midst of a once in a century global financial crisis? It wasn't as if there was anybody in the financial community/press that said otherwise?

No matter, after the UK austerity plans are implemented, the UK will be awash with money.

Can they bailout BP shareholders next?

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derek farman

Jun 07, 2010 at 09:24

I am a Lloyds shareholder , but this is not the time to go for this compensation .

Don't these other shareholders realise that we are all in deep financial trouble as a country , and that this action can and will only make matters worse .

We all have to bear the pain of previous bad government and bad banking decisions and just get on with it as best we can . .

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Roland

Jun 07, 2010 at 09:26

Good luck to this action group.

The Lloyds take-over of HBOS was another of Brown's dastardly acts following yet another failure in his regulatory set-up. Blank, Daniels, Darling, the Treasury, the FSA and Mandelson were among the accomplices. Brown couldn't care less who got trampled by his actions especially if they were perceived in his tiny mind to be rich and not one of his. Nevermind the broader effects.

R

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joe stalin

Jun 07, 2010 at 09:29

How utterly ridiculous! The only benefactors of case such as this are the parasites operatting on the fringes of the legal profession. How on earth are Lloyds going to compensate everyone holding shares at the time. The best way to ensure that you get your money back is to buy the shares now when they are being buffeted by media fuelled market hysteria. Lloyds will come good- it is in everyone intersst that they do. The only fly in the ointment at the moment is Vince Cable.

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Gordon

Jun 07, 2010 at 09:31

I hope all get full compensation. They lied to you!!!! you deserve to be compenasted !!!!

Good luck

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Jim Roulston

Jun 07, 2010 at 09:40

"the value of investments may decrease"

- what part of that is unclear? All that will happen is that millions will be wasted on legal wrangling and we'll get back to this one caveat.

It would be comforting to be able to reclaim all the dud investments which are made in good faith.

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David Morris Jones

Jun 07, 2010 at 09:42

The first target should be the board of Lloyds - as it was constituted at the the time of the takeover. None of them had any banking qualifications whatever.

Eric Daniels had the effrontery to carry on charging his son's school fees on his Lloyds expense account . He should be removed from the board and all his assets taken from him to compensate the shareholders.

Lloyds former chairman Sir Victor Blank - the socialist brown-noser who agreed the HBOS deal in that infamous cocktail party with Gordon Brown - should also have all his assets confiscated

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JOHN K

Jun 07, 2010 at 09:44

What about Bradford and Bingly shareholders who were also cheated by the rights issue few weeks before disaster.

Like many shareholders, I have lost on both Lloyds/Hbos and B&B. I can buy LLoys Group now to recoup some losses but not on B&B.

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David Evershed

Jun 07, 2010 at 09:49

Eric Daniels is still claiming that the takeover is beneficial for shareholders.

If he looked up from his desk at today's share price and compared it with the pre merger share price he might return to the real world.

The current low share price reflects the future prospects Eric! After the damage done to the shares he should already have resigned.

Since he has no honour and has not resigned he should be sacked with no compensation.

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Sungei Patani

Jun 07, 2010 at 10:44

I quite agree with those correspondents on this blog who criticise the action being taken Lloyds Action Now (LAN).

The British taxpayer was not responsible for the fiasco of the takeover of HBOS by Lloyds and hence should not have to contribute anything. The people responsible were Gordon Brown, Alistair Darling and the Board of Lloyds TSB. Only they should be sued and be made to payout if found negligent. This though would be a fruitless activity as their collectively assets would only meet a tiny fraction of the losses.

The only ones to gain would be the legion of lawyers on both sides who as usual would make a killing.

The country is deeply in debt; it can not afford to bail out any particular group of investors such as Lloyds TSB or Equitable Life on both of which I made losses. We have to get away from this culture of expecting compensation whenever we experience a setback. Take it on the chin and carry on. Conversely we investors should not be penalised by extortionate rate of capital gains tax.

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William Phillips

Jun 07, 2010 at 10:46

Whatever the outcome of such litigation-- which on precedent will be long, full of false dawns and disappointing to all parties save the attorneys-- one thing is already clear.

The hurried takeover by Lloyds TSB of HBOS, in pursuit of post-crunch market share and incited by politicians, was one of the biggest unforced errors in the whole history of British business.

Blank and Daniels may escape with their hides and pensions, at the price of years of tedious recriminatory legal hearings. They can never escape the taint of having thrown away a winning hand.

Competitors were struggling to survive. A relatively sound bank bearing two respected and historic names foolishly chose to throw its good money after other banks' bad. It leaped into the dark of toxicity, although by the time Gordon Brown said 'jump' and Blank answered 'right away, sir' the risks of life after subprime were well known.

Whatever possessed them?

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Peter Sutherland

Jun 07, 2010 at 12:26

Material non-disclosure by the regulators must surely undermine their own mandate to police this kind of offence.

Can someone please advise me on how to contact the Lloyds Action Now group because I am one of the shareholders that held their shares on the assurance by Lloyds directors that the merger was an opportunity of a lifetime for Lloyds shareholders.

Do I recall correctly that some former HBOS directors tried to raise money to snatch HBOS from Lloyds??

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Chuck

Jun 07, 2010 at 13:11

I guess Peter Sutherland is one of the "duped" Lloyds investors.

In answer to Peter's question "Can someone please advise me on how to contact the Lloyds Action Now group", type "Lloyds Action Now" into the Google website (www.google.co.uk). Once the page has appeared, click on the top right hand section where it says "Contact, Legal, etc".

Have fun!

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Chuck

Jun 07, 2010 at 13:14

I guess Peter Sutherland is one of the "duped" Lloyds investors.

In answer to Peter's question "Can someone please advise me on how to contact the Lloyds Action Now group", type "Lloyds Action Now" into the Google website (www.google.co.uk) and click "I'm Feeling Lucky". Once the page has appeared, click on the top right hand section where it says "Contact, Legal, etc".

Have fun!

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Keith Dillingham

Jun 07, 2010 at 13:56

I have a few Lloyds shares but I'm not keen on the blame and compensation culture though I do believe in responsibility.

When you buy or own shares you are taking a risk, and part of that risk is that the people running the company are incompetent or will do stupid things. And Lloyds takeover of HBOS was incompetent.

What annoys me is that when bosses do foul-up they don't take responsibility. They have a 'we're all good fellows and we've given excellent service to the company' attitude and think any disaster should be regarded as a slight oversight on an otherwise first class record. They continue in their top jobs, or if they do retire early then it's on a gold plated pension.

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Jonathan

Jun 07, 2010 at 14:08

The shareholders own the company! Isn't that like suing yourself?

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Gerry Walker

Jun 07, 2010 at 15:28

I was an HBOS shareholder. Lloyds bid 2.32 and then reneged to 1.71. If these shareholders think they got a bad deal then they should have been HBOS shareholders. I am still fuming at the HBOS board and at the intervention of Gordon Brown in this. Lloyds TSB were denied Abbey National which is smaller than Halifax in the mortgage market and yet Lloyds TSB get their hands on Halifax and Bank of Scotland with ministerial intervention. This is not good enough. And just how did HBOS get clearance for a prospectus in July on a Rights Issue when 2 months later they were on the point of financial collapse. To say this episode requires judicial investigation is understating matters.

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Lord Escrow

Jun 07, 2010 at 16:43

Secret Loans, in Billions.

Why did Lloyds not openly and honestly declare that massive secret loans were being supplied both by them and the Goverment to keep HBOS active from virtual bankrupcy.?

Is it too much to expect that shareholders under corporate law be given open and true facts with which to make their own decisions. on investing.?

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Richard Atkinson

Jun 07, 2010 at 18:02

So the Shareholders turn around and sue Lloyds for misleading them. And let's say they win their action. So the courts fine Lloyds heavily for its misdeeds. And Lloyds then pays the fine out of profits. That it otherwise would have paid to the shareholders in dividends or future capital growth. Is it me ?????????

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Martin Drew

Jun 07, 2010 at 18:37

The owners of Lloyds, the shareholders, are suing the company they own for compensation? Nah, that makes no sense at all. Who do they think is going to pay the compensation? The board? Well even if you bankrupt them what will you get, not even enough to cover the legal costs. I can sympathise but this action calls into question their sanity.

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Graham Barlow

Jun 08, 2010 at 09:26

Whether it is the right time or the wrong time is irrelevant , what this action is all about is skulduggery at political levels, and conniving to see what you can get away with to get Brown and his Govt. of the hook of direct Nationalisation of HBOS. We all know now rhat HBOS was in terminal decline and within 2 days of Bankcruptcy. With the massive lendiing by the B of E it is difficult to believe that the Lloyds Directors and the Treasury were Not aware of these facts which were not properly highlighted for the shareholders to appreciate at the time of the vote. A cover up is suspected and only an independant Court examination of the facts will establish the truth.

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snoekie

Jun 08, 2010 at 16:07

I agree with Keith Dillingham. The real culprit in this is Gordon Brown, aided and abetted by Mendelssohn, Darling and Myners.

The aforementioned being politicians are probably exempt from the consequences of their actions, and clearly apart from Myners clearly they knew not what they were doing, except hopefully saving their necks.

Blank should've been highly suspicious about the liabilities, if he did not already know. If he knew, then he should suffer, with his codirectors, the consequences, billions in damages which would bankrupt them all, and that would include taking their pension pots.

Unfortunately the politicians would escape. How about a case of conspiracy to pervert the course of justice, avoiding the rules they brought in to regulate the market by waving the transaction through, which clearly the EU did not like. Notable that the EU has gone remarkably silent.

I doubt that Myners/Brown/Darling/Mandelson will be called to give evidence and even if they do they will probably lie through their teeth and claimed privilege in relation to interdepartmental communications.

Shareholders taking action against the company, in effect requiring other shareholders who have not joined them to pay for the "losses" which is hardly equitable because the silent majority have also lost billions.

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kk

Jun 08, 2010 at 17:50

.... It now emerges that senior advisors to the previous government were already preparing for the market crash as long ago as 2004-05 as they first statred looking at the vehicle scrappage scheme at that time some 4 years prior to the Lehmans crash so given that, it must provide insight to the argument that the shareholders were ramped up during what appeared to be a financial crisis that had suddenly unfolded on the citizens of this country when in reality they were talking to both DVLA and flagging up possible trades and de regestering the vehicles from the post period 1996.

We voted the HBOS deal out of genuine concern for the country and the Banking system when really our genuine benevolence was being subverted.

In my opinion Lloyds Shareholders were being ramped up in order to comply with the fear at that moment in time.

We deserve consideration from the courts.

Yrs

kk

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Colin Phipps

Jun 09, 2010 at 02:26

Lloyds bank like every other bank in the world is trying to overcome the difficulties that the current crisis entails. Bank need support, the media is not supportive in its constant tales of doom and gloom, accelerating panic and misguiding the general public. Its time the buck stopped and the recovery is supported. The past is just that. So Lloyds bank shareholders feel cheated. I doubt it, if anyone was cheated, it ws circumstantial and unavoidable, certainly necessary. As the Lloyds bank management state, the gain is in middle to long term benefit. All have to hang on in there and support your investment. Unfortunately there is no magic wand available in this climate. One has to realize that the days of plenty and easy come for the western society is over. In short, belt tightening and the reduction in social binging is on the cards. Britain has had it to good to long. Views need to change from We expect to that of we will unite, strive for and work to retain the community spirit, recover family values and the need to be self supporting, not state created unearned spongers and life term aid claimants,

On a personal note. Lloyds bank shareholders should look at others who feel grieved. Like myself and other good citizens who lost their savings when the Derbyshire sold out to their IOM branch to Kaupthing Singer and Friedlander the Icelandic bank. Subsequently put into liquidation . Now there's a case for criminal investigation.

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