Lloyds Banking Group faces legal action from shareholders

19 October 2010

Shareholders in Lloyds Banking Group are to take legal action against the institution claiming that they were not made aware of the financial problems faced by HBOS before its acquisition.

According to news reports, 1,500 shareholders are involved in the action which alleges that the full extent of HBOS’s financial difficulties was never fully revealed.

Lloyds Action Now (LAN) is representing investor interests in both the US and the UK and is expecting to soon launch a claim against the bank.

Johan du Toit, a London-based legal expert and head of a LAN delegation, told the Scotsman: "While this is a civil case there could be implications for the directors of Lloyds who did not make a proper disclosure of the facts."

Part of the shareholders’ claim alleges that the Treasury and directors at Lloyds failed to inform them that HBOS had borrowed £24.5 billion in emergency funding to prevent it from collapsing before the merger could go-ahead.

However, a spokesman for Lloyds has refuted the claims by saying that the level of disclosure was appropriate and shareholders were aware of the HBOS funding.

The representative added that there are no grounds for legal action against top professionas such as outgoing chief executive Eric Daniels.

By Jim Ottewill

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