Lloyds ex-boss in HBOS denial Daniels: I didn’t drive £12bn doomed deal

THE former boss of Lloyds yesterday denied paying over the odds for stricken

HBOS at the height of the financial crisis.

Eric Daniels also rejected being the driving force behind the deal – or of being pressured into it by the then Labour government.

His evidence came in a High Court trial over Lloyds’ £12billion purchase of Halifax Bank of Scotland in 2009.

Nearly 6,000 Lloyds’ shareholders are suing the bank and five ex-directors, including Daniels, for £600million after a slump in its share price and for lost dividends.

Daniels said the merger made commercial sense when HBOS chief Andy Hornby approached Lloyds in mid 2008, by which time the bank was already in trouble. But he told the court: “I thought the competition issue would not allow it.”

That changed by late summer when wholesale funding markets froze.

The court heard PM Gordon Brown told Lloyds chairman Sir Victor Blank Labour would help smooth the way. Lloyds’ board agreed to offer up to 275p a share, despite it being the amount investors snubbed in an earlier rights issue.

Daniels said Bank of England Governor Mervyn King told him “it was now or never to do the deal” or HBOS would be nationalised the next day. Lloyds agreed 232p a share, well above the 88p to which HBOS shares crashed ahead of the announcement. Daniels claimed it needed to convince HBOS’S board and shareholders who thought it was a “short term crisis”. He insisted it was never a “rescue”, saying: “This was something we would only do for the benefit of our shareholders. We were not a charitable institution.”

He also claimed other banks were rumoured to be interested, even though Hornby denied he was in talks with anyone else. The crisis at HBOS eventually swamped Lloyds, which had to be saved by a £20bn taxpayer bailout.

The trial continues.

DEFIANT He said deal made sense