Ex-lloyds bosses face grilling as investors seek HBOS payout
THE former finance chief of Lloyds Bank, Tim Tookey, is expected to face the longest grilling of five former directors in a High Court case over the group’s deal to rescue Halifax Bank of Scotland (HBOS) at the height of the financial crisis.
Around 6,000 shareholders are suing Lloyds and key ex-bosses – including former CEO Eric Daniels and former chairman Sir Victor Blank – for more than £600m in compensation as they believe Lloyds misled them by not disclosing the parlous state of HBOS before its 2008 takeover.
The total sum being claimed is higher than previously thought, having grown as expert testimony gathered by the claimants indicated greater alleged losses than the figure of around £400m previously thought.
The case is expected to shine a light on one of the banking sector’s most controversial deals when the financial system was on the brink of collapse.
It is scheduled to kick off in early October, although it could be delayed due to a recent change of judge after the one dealing with it, Mr Justice Nugee, broke his leg. Mr Justice Norris is replacing him.
The claimants include 5,700 private shareholders and more than 300 institutional investors represented by law firm Harcus Sinclair UK. The case is listed for 14 weeks.
According to a draft timetable for the case, seen by The Sunday Telegraph, Mr Tookey will be cross-examined for up to six days. He was CFO of Lloyds from 2008 to 2012 and is currently finance boss of Old Mutual Wealth. It is understood Mr Tookey is set to face the most intense questioning as he oversaw the financials of the HBOS deal. Mr Daniels and Sir Victor are each expected to be questioned for up to four days and two days respectively.
Mr Daniels – who has defended the HBOS deal down the years for “not costing the taxpayer a bomb” in more bailouts – has held a number of top roles since leaving Lloyds in 2011, including at Stormharbour, CVC Capital Partners and Russell Reynolds.
Sir Victor left Lloyds in 2009 and has kept a lower profile, although he has helped run a number of charities.
George Truett Tate, former boss of wholesale and investment banking at Lloyds, and Helen Weir, Mr Tookey’s predecessor as CFO and current finance boss at Marks & Spencer, will be questioned for up to four days and 1.5 days respectively. Lloyds expects the cross-examinations to take less time.
The claimants’ arguments are expected to focus on whether the HBOS tie-up was in the best interests of shareholders, and whether documents issued to investors in support of the deal were misleading.
Lloyds in its defence is expected to argue disclosure went beyond what was required and, even if it was deficient, would not have changed the vote, which went 95pc in favour. The claimants held less than 5pc of Lloyds shares at the time.
Lloyds believes two similar claims have already been thrown out in the US – an argument refuted by the claimants. A Lloyds spokesman, who spoke on behalf of the bank and the former directors, said the claims had no merit and would be “robustly” contested.