Bombshell memo ‘shows Lloyds plan to exploit firms’
Customers plundered in RBS-style plot to seize assets, court hears
LLOYDS executives plotted to profit from troubled clients at the height of the financial crisis, court documents claim.
The papers allege the exploitation of firms recently revealed to be prevalent at Royal Bank of Scotland was also happening at Lloyds.
Liquidators for a car auction site who are suing Lloyds have revealed the existence of an explosive 2008 memo.
It outlined a plan to double the income the bank would take from struggling businesses it was supposedly helping nurture back to health.
In a pre-trial hearing held last week the liquidators said: ‘This document is, in effect, Lloyds’ equivalent of the now notorious RBS “Dash for Cash” manual for making money out of its “business support” activities.’
An RBS executive in 2008 wrote a memo to staff outlining plans to extract fees from troubled firms, which he had called ‘Project Dash for Cash’.
An official report into RBS’s global restructuring group – revealed by The Mail on Sunday earlier this month – found subsequently that the bank was focused on plundering clients for fees rather than getting them back on their feet.
The secret Lloyds memo threatens to drag the bank into the furore about the poor treatment of firms facing difficulties. Lloyds has already faced criticism over its behaviour towards clients in its HBOS Reading branch. It inherited this operation when it took over the former Halifax Bank of Scotland in the financial crisis.
The court papers allege documents have been disclosed showing that Lloyds’ Business Support Unit was trying to profit by taking stakes in distressed companies at rock bottom prices. Staff were incentivised to carry out the plan to profit from struggling business owners, the papers allege.
The 2008 memo outlined three key objectives. One of these was the ‘doubling of income’ and another was ‘moving from defenders to strikers’, denoting a more aggressive approach to customers.
Lloyds planned to build a network of insolvency practitioners to help it carry out its plan, including people working for accountancy giants PwC and KPMG. The memo talks of making money from firms by ‘buying the business at low value’. The Lloyds executive who wrote it, Matthew Packham, aimed to ‘maximise income and gains’.
The full memo has not yet been made public. Its existence was revealed in a case brought by the liquidators of Premier Motor Auctions, a company set up and run by entrepreneur Keith Elliott which went into administration in late 2008.
The liquidators, Menzies, are suing PwC and Lloyds for £50 million over the collapse, claiming they conspired to remove Mr Elliott as part of a broader plan that allowed the bank to take a stake.
The car auction site was introduced to a PwC partner by Lloyds in 2008 after it had cashflow problems.
Premier Motor Auctions claims it was told the partner wanted to become a non-executive director. The company alleges the partner passed on confidential financial information to the bank, which led to PwC carrying out a review of the business. The firm was later put into administration and Lloyds took a stake.
Lloyds, which is disputing the claim, said its Business Support Unit (BSU) is not a profit centre and its objective is to restore customers’ troubled companies to financial health. It rejected any comparison to poor behaviour at banks such as RBS.
The bank added that the document set out theoretical ideas that were never fully put into practice.
Mr Elliott told The Mail on Sunday: ‘We now have the smoking gun which proves that Lloyds had a concerted strategy to exploit distressed companies for its own financial gain. The BSU arrived at the doors of companies offering help, but it was a Trojan horse to get inside and take advantage.’
The case will be heard at the High Court in April.