Lloyds ex-boss denies HBOS advice taken ‘slavishly’
● Eric Daniels says board knew of acquisition risks ● But says on balance it had real investor value
The former chief executive of Lloyds has told the High Court that the bank did not “slavishly” follow expert advice over the acquisition of HBOS in the financial crash.
Eric Daniels was being questioned yesterday by lawyers for a group of 5,803 former Lloyds TSB shareholders who claim they were “mugged” when the bank recommended the deal without disclosing HBOS’S true financial state.
They are suing Lloyds Banking Group, Daniels, former chairman Sir Victor Blank, former chief financial officer Tim Tookey, one-time director of retail banking Helen Weir and George Truett Tate, former director of wholesale banking, over alleged losses of more than £550 million.
Richard Hill QC has claimed thatthedirectorsrecommended the “disastrous” acquisition, knowing that HBOS was on “emergency life support” from the Bank of England that would later necessitate Lloyds having to take a £20 billion taxpayer bailout.
Asked by Hill yesterday whether his function as “the man guiding the ship” was to make sure Lloyds shareholders were “adequately protected”, American-born Daniels said his responsibility was to ensure they got something that added value, and that would make the franchise stronger.
Daniels told Mr Justice Norris: “Our responsibility was to mitigate the risk to the extent possible but also to allow the investors to make an informed decision.”
He described it as a “balanced recommendation”, adding: “We believed we were cognisant of the risk and were taking steps to mitigate that risk.”
Daniels said that advice was taken from investment bankers and other experts, but ultimately it was the board’s decision.
“We used their advice but the board always took the final decision and always in a context where we got a wide variety of views.
“We valued the advice of our experts but ultimately the board had to take that and frame it, give it context, and take the decision itself.
“We did not slavishly follow any one piece of advice.”
Daniels added he still thought “it was in the best interests of the Lloyds shareholders to proceed with the acquisition”.
His belief that it would provide long-term value for Lloyds shareholders was reflected in his decision to take up his full entitlement of shares – approximately 183,000 – in January 2009 and to purchase a further 1.89 million shares over the remainder of that year. Chrysaor has awarded Sparrows Group a three-year crane management services contract for the three operating assets it took ownership of from Shell. The operator became the largest independent E&P company in the region following the deal with Shell earlier this year to acquire the platforms as part of a larger asset package. The scope of work will see Sparrows operate and maintain seven cranes across the Armada, Everest and Lomond gas platforms.