Lloyds shareholders in a cash-call fury

Published on Thursday 26 November 2009 20:54

LLOYDS Banking Group shareholders yesterday voted overwhelmingly in favour of the group's record £13.5 billion cash call, despite angry scenes at a meeting in Birmingham.

Shareholders spoke of their shock that the troubled bank had been propped up by a secret 26.5 billion taxpayer loan.

Investor Brian Pearce, from Durham, said: "Shareholders have been wronged. We should have had the information about the loan at the time of the takeover (of HBOS]. Without it we have been embezzled by the government.

"Blank is the most appropriate name for our former chairman Sir Victor Blank. That's what he is. Blank between the ears."

Another investor travelled from Wales dressed as Father Christmas to make the point that Lloyds shareholders gifted Prime Minister Gordon Brown and Chancellor Alistair Darling a solution to their HBOS problem.

"They must have thought Christmas had come early," he said.

Peter Hepworth, from Doncaster, added: "Had I known about the government loan I would have sold my Lloyds shares well ahead of getting involved in the HBOS lame duck.

"You, as a board, knew, but we as shareholders didn't. You are employed by us and we should have been told. If you couldn't divulge the information because of the political background, you should have walked away and fulfilled your duty to shareholders. History shows that you failed in that important duty."

Lloyds' chairman Sir Winfried Bischoff acknowledged details of government support had not been given in the merger prospectus.

But he added: "Any prospectus has to be passed by a number of regulators including the Stock Exchange listing authority, the Bank of England, the Financial Services Authority and the government."

Another shareholder, Brian Lockley, called for an inquiry by the Justice Secretary Jack Straw into the way the Bank of England Governor Mervyn King and Chancellor Darling acted as insolvency practitioners by keeping HBOS secretly afloat.

He said: "They allowed this company to continue trading while insolvent which amounts to wrongful trading."

Several shareholders spoke of their anger at the suspension of dividends. Hepworth said: "I'm retired and rely on my dividends. Now I'm having to forgo them. What sacrifices have directors made? You got us into this mess and are still being paid handsomely."

Bischoff repeatedly asserted his belief that in time the Lloyds HBOS merger would be seen as sound. He said: "It can't be judge over the short term."

He added that disposals announced to date would be sufficient to satisfy European Union competition rules, and that Lloyds believed the economy had stabilised.

Daniels claimed the worst of HBOS's bad debts were also behind them. He said: "We have taken a very prudent and cautious valuation of the HBOS position and we believe the worst of the write offs are behind us."

However, he acknowledged that if the economic climate or position with loans changed, for better or worse, then the picture might look different.

Outside the meeting, shareholders spoke of their disillusionment. Scottish investor Evelyn Adams, 80, said: "I came out of a sense of loyalty to my father. He began working at the old TSB as a clerk in 1912, and worked for the bank for 50 years, managing most branches in Glasgow by the end. He was very idealistic about banking and would be appalled at what has gone on. I think they should sell off the TSB as the TSB, so we can have our bank back."

Iain MacKay, who works at Napier University in Edinburgh, said: "The whole thing is scandalous. Lloyds shareholders have been sold down the river."