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Lloyds shareholders sue over "withheld' loan information

8 June 2010

Shareholders in Lloyds Banking Group are seeking compensation from the Government and two former directors of the bank over losses they claim to have suffered following Lloyds' takeover of HBOS.

They allege that former Chancellor Alistair Darling, together with  former chairman Sir Victor Blank and chief executive Eric Daniels, withheld information about a £25.4bn Bank of England loan to HBOS ahead of the takeover in 2008.

The total losses claimed could approach £14bn.

Jim Rai, a solicitior for the Lloyds Action Now group of shareholders, claimed there could be "no doubt" that the fact of the loan was being kept secret not only for the possible advantage of the UK banking system, but so that shareholders were not put off the proposed takeover.

Lloyds denies the claims and says it provided "thorough and appropriate information" about its liquidity position and that of HBOS, "including the general use of Government backed liquidity schemes", without which there would be a material impact on the solvency of the business.

Formal demands for compensation have been sent and the defendants have 90 days to respond.

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