Shareholders of Lloyds Banking Group 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.’