Ex-lloyds bosses face grilling as in­vestors seek HBOS pay­out

The Sunday Telegraph - Money & Business - - Business - By Iain With­ers

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.

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