Sants denies Lloyds ‘pressure’

The former UK financial regulator has told the High Court it did not intend to “pressurise” Lloyds into buying HBOS.

Sir Hector Sants, who was chief executive of the nowdefunct Financial Services Authority (FSA) in January 2009, was being questioned 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, former chairman Sir Victor Blank, ex-chief executive Eric Daniels, former chief financial officer Tim Tookey, former retail banking director Helen Weir, and ex-director of wholesale banking George Truett Tate over alleged losses of £550 million.

Richard Hill QC has claimed the directors recommended the “disastrous” acquisition, knowing HBOS was on “emergency life support” from the Bank of England and Lloyds.

In his evidence, Sants said one of the FSA’S statutory duties was to protect the UK’S financial stability and so securing the future of HBOS aligned with those legal objectives.

“The position which HBOS found itself in following the collapse of Lehman Brothers on 15 September 2008 meant that, from a supervisory perspective, it was unlikely to be sustainable as an independent institution.

“However, I emphasise that whilst the FSA may therefore have been supportive of the acquisition it did not in any way intend to pressurise Lloyds, overtly or otherwise, into acquiring HBOS.”

Asked by Hill if he was “strongly motivated” to make the deal happen, Sants said it seemed the best option, but denied “shepherding” the deal through. The case continues.