Lloyds shareholders seek disclosure of secret emails over HBOS deal
Lloyds shareholders will go to court tomorrow to seek disclosure of secret emails and documents relating to its disastrous acquisition of Halifax Bank of Scotland (HBOS) during the financial crisis.
Around 6,000 claimants who held Lloyds TSB stock at the time say they lost around £350 million as a result of the move.
Following the deal the enlarged Lloyds Banking Group had to be rescued by taxpayers. The Treasury still owns just under 15% of the business.
The claimants allege there were breaches of duty to shareholders in recommending the acquisition in 2008/9 and providing information about the proposed deal and the financial circumstances of HBOS.
They say they were kept in the dark regarding lifelines worth £25.65 billion and 18 billion US dollars (£12 billion) provided by the Bank of England and the US Federal Reserve to HBOS, and a £10 billion loan facility from Lloyds.
The investors are asking a High Court judge to set a timetable for the disclosure of emails and other documents, including the legal advice that Lloyds and its directors received regarding the contents of a circular to shareholders about the deal in November 2008.
Lloyds has so far refused to release these on the grounds that the information is privileged.
Lawyers are also seeking disclosure of communications between directors and the Treasury, the Bank of England, the Federal Reserve and officials from the then-regulator, the Financial Services Authority.
A Freedom of Information request relating to the case has been turned down.
Claimants include around 5,700 private shareholders as well as pension funds and other large investment funds based in the UK, Europe, the US, Canada and Asia.
Lawyers at Harcus Sinclair say it is one of the largest claims brought against a UK bank and its directors arising from the financial crisis.
The claimants argue that the value of their shares was reduced through the "gross over-valuation" of HBOS in the deal by Lloyds TSB to acquire it.
Lloyds said: "The group's position remains that we do not consider there to be any legal basis to these claims and we will robustly contest this legal action."