RBS and Lloyds Banking Group shareholders take action

by Gill Montia

Story link: RBS and Lloyds Banking Group shareholders take action

Shareholders in Royal Bank of Scotland (RBS) and Lloyds Banking Group are challenging events that have resulted in major losses for both institutional and individual investors in the banks.

In the case of RBS, The Times has reported that local councils in Merseyside and North Yorkshire have joined forces to file a class action law suit in the US.

Cherie Booth QC, wife of former Prime Minister Tony Blair, is acting on behalf of the councils, working with US law firm Coughlin Stoia Geller Rudman and Robbins which was successful in securing compensation for shareholders in Enron, the US conglomerate at the centre of a financial scandal in 2001.

The entire RBS board at the time of its near collapse is reportedly named in the law suit.

Meanwhile, former Lloyds TSB and HBOS shareholders have formed an action group with the UK Shareholders Association.

The merger of the banks was agreed in haste in September of last year, with the approval of the Government.

HBOS was on the verge of collapse and Lloyds TSB grasped an opportunity to become the UK’s largest retail bank, competition rules having been suspended by ministers anxious to prevent the failure of HBOS.

Shareholders maintain that their views on the merger were ignored and last month the recently formed Lloyds Banking Group, which is 43% state owned, revealed that HBOS had posted a loss of £10.8 billion for 2008, while the group’s Lloyds TSB business reported an 80% fall in profit.

Furthermore, the group’s participation in the Treasury’s Asset Protection Scheme could mean that the taxpayer ends up owning 77% of the business.

Lloyds TSB and HBOS shareholders are now asking for a re-examination of the facts surrounding the merger.