Lloyds Bank asked a High Court judge yesterday to throw out parts of a shareholder legal action over the acquisition of HBOS, including allegations that some Lloyds executives knew HBOS was rigging its Libor rate submissions.
Lawyers for Lloyds also branded as “fanciful” investor claims that the bank would not have needed a major recapitalisation ordered by regulators in the financial crash but for the disastrous acquisition.
Helen Davies QC, representing Lloyds, said Hector Sants, former chief executive of the now-defunct Financial Services Authority, had told Lloyds chief executive Eric Daniels in October 2008 that even if it did not proceed with the HBOS acquisition it was “non negotiable” that it would still have to raise £7 billion of additional capital.
Davies said this was because the authorities were anxious to make major banks “bullet proof” in the financial turbulence of the time.
It came in a three-day pre-trial hearing before Mr Justice Nugee, where Lloyds is seeking a “summary judgment” dismissing or striking out 11 separate allegations made by lawyers for the Lloyds Action Group.
About 6,000 investors claim they lost about £350 million as the share price of the merged group plummneted when the full scale of the problems at the acquired business later came to light. The full court action is due to start at about the end of 2016.
Shareholders’ allegations include that Lloyds breached its fiduciary duties by failing to reveal in a circular seeking approval for the acquisition that HBOS was receiving major covert financial help from central banks.