Lloyds in the dock as case brought by shareholders

LLOYDS Banking Group and five of its former executives will be asked to defend themselves in court this autumn in a case brought by shareholders who claim the lender misled them over its acquisition of HBOS.

The Lloyds/HBOS Shareholder Action Group, which represents about 6,000 former Lloyds TSB shareholders, confirmed it has been granted a 12-week trial starting on October 2 at the Royal Courts of Justice in London.

The group is seeking around £350m in damages in the case against Lloyds Banking Group, former chairman Sir Victor Blank, exchief executive Eric Daniels, former chief financial officer Tim Tookey, one-time director of retail banking Helen Weir and ex-director of wholesale banking George Truett Tate.

The group says it also expects a cross-examination of Sir Hector Sants, who headed the Financial Services Authority when Lloyds TSB was given the green light to acquire HBOS for £12bn in 2008.

The claimants comprise around 300 institutional shareholders – including pension funds and investment funds from the UK, Europe, Asia, Canada and the US – and around 5,700 retail investors who say Lloyds TSB failed to disclosed the true financial state of HBOS when it launched the acquisition.

HBOS saddled Lloyds with heaps of toxic assets stemming from risky bets made by HBOS on commercial property during the boom years. Lloyds was later forced to take a Government bailout worth £20.3bn, which has in part been blamed on the acquisition.

A spokesman for the action group said: “The trial will demonstrate not only that Lloyds TSB shareholders were made to pay for the parlous state of HBOS, but it will also highlight the inexcusable failure of the directors to share crucial information with their shareholders ahead of the deal going through and the implications of not having conducted appropriate due diligence to ensure that its own shareholders were not being compromised.”

The group, represented by law firm Harcus Sinclair, said it hopes the trial will determine which players had key information, whether any information was potentially “concealed” by Lloyds TSB directors and what role authorities played in pushing through the deal.

A Lloyds Banking Group spokesman said: “The group’s position remains that we do not consider there to be any merit to these claims and we will robustly contest this legal action.”

News of the trial date comes days before Lloyds Banking Group faces shareholders at its annual general meeting, where it is already expected to face questions over efforts to redress fraud victims who suffered at the hands of former HBOS staff.