Lloyds shareholders call PM to account on HBOS merger

by Gill Montia

Story link: Lloyds shareholders call PM to account on HBOS merger

The Lloyds Action Now group is demanding the release of notes on key conversations that took place between Prime Minister Gordon Brown and Lloyds TSB chairman, Sir Victor Blank, in connection with the takeover of HBOS.

The doomed merger, which was announced in September, has left the resultant Lloyds Banking Group 43% state-owned because of losses from the HBOS side of the business.

Shareholders angry at the speed at which the agreement was reached are now demanding details of discussions between ministers and board members under the Freedom of Information Act.

According to Lloyds Action Now, the Prime Minister and his Business Secretary, Lord Mandelson, had full knowledge of the extent of HBOS’s debt problems well before the merger.

The group claims that the deal was brokered by the Government because of fears that the collapse of Halifax, Britain’s biggest mortgage lender, could lead to a run on the pound and an “implosion” of the UK’s financial services industry.

Shareholders are considering legal action against the directors of Lloyds TSB and HBOS and their advisors on the grounds that a lack of due diligence left investors with an unfair picture of the proposed merger.

In the past few days, The Times has reported that Lloyds Banking Group could be facing writdowns of up to £13 billion for the first six months of 2009.

According to the newspaper, the bank is facing huge loses on HBOS’s commercial property, business and mortgage books.