Lloyds defends directors as £600m HBOS trial begins

A £600 million shareholder lawsuit against Lloyds Banking Group opened today in the Royal Courts of Justice, with the defendants insisting investors were properly informed about the rescue of HBOS during the financial crisis.

The 5700 private investors and 300 institutions allege that Lloyds top brass including chief executive Eric Daniels withheld the truth about HBOS finances.

After the merger went through, Lloyds shares collapsed. Central to the case is the suggestion that HBOS was taking emergency funds from central banks including the US Federal Reserve to stay afloat. In opening arguments, the bank agreed it had made “no disclosure” of this but said “the director defendants were not under any obligation to disclose that specific fact to the Lloyds shareholders. Accordingly, they deny the allegations of “concealment”.

Investors voted the deal through, but now say they wouldn’t have done had they had a fuller picture.

A spokesman for the Lloyds Shareholder Action Group said: “We will finally have our day in court after nearly 10 years and expose the injustice done to Lloyds TSB shareholders who were duped into rescuing a defunct HBOS.”