Lloyds’ bill over HBOS fraud debacle could climb to £500 million
LLOYDS will be forced to set aside hundreds of millions of pounds in compensation for fraud victims when it reveals its annual profits next month.
Sources close to talks over a redress scheme told The Mail on Sunday the bank could pay £500million or more to victims of a fraud at the Reading branch of its tarnished subsidiary HBOS.
Talks are yet to conclude but sources said Lloyds boss Antonio Horta-Osorio wants to compensate victims swiftly after meeting some in person.
He saw customers break down in tears as they described how corrupt bankers ripped apart their businesses.
Rogue bankers at HBOS Reading destroyed small businesses between 2003 and 2007 and squandered the profits on prostitutes and luxury holidays. Six bankers and advisers were convicted of fraud in 2017 and sentenced to a total of almost 50 years in jail.
Horta-Osorio wants to draw a line under the saga after a review by retired judge Sir Ross Cranston found the bank’s original redress scheme, which paid out £102million, had ‘serious shortcomings’. Sources said Horta-Osorio, who has been at the helm of Britain’s biggest retail bank since 2011, is keen to salvage his reputation before departing as chief executive.
He has also halted three legal battles with victims in an effort to repair relations between the bank and its small business customers.
Victims have been fighting for fair compensation for more than a decade. Nikki Turner, director of victims’ group SME Alliance, said: ‘We have struggled with this for years.
‘We hope this will encourage other chief executives to be more handson. How do you know what’s going on in the bank, if you don’t know about it personally?’
Lloyds will work with victims, regulators and MPs to finalise plans for a new compensation scheme to be announced within weeks. Sir Ross
Cranston is expected to lead the discussions.
The payouts will take another bite out of Lloyds’ profits – alongside a hefty bill for PPI payouts to be announced on February 20.
The Mail on Sunday revealed the extent of customer complaints at Lloyds in December. Documents showed the bank owed about £770 million to 4.37million people at the end of August last year – around one in seven of its customers – on top of payouts for mis-sold PPI.
A Lloyds spokesman said: ‘The group is committed to ensuring Sir Ross Cranston’s recommendations are implemented and that customers affected by the HBOS Reading fraud are offered the option of an independent re-review of their cases, looking again at the assessment of any direct and consequential losses that flowed from the fraud.’