Lloyds action gains momentum

About 1,250 private investors have signed up for a bid to recoup some of the 14 billion in shares value that was lost after the controversial bail-out of the Scottish bank.

About 100 shareholders attended an Edinburgh hotel last night to hear the case for legal action based on the fact that Lloyds failed to disclose the full state of HBOS's finances when it asked shareholders to vote on the takeover.

The legal team behind the Lloyds Action Now campaign is hopeful of recruiting "tens of thousands" of the 800,000 Lloyds TSB shareholders to bolster legal battles in the US and the UK. Shareholders were told: "The only way we can pursue this if you all join together."

The legal action will attempt to recoup the 2 million estimated to have been lost by private investors. Institutions lost a further 12m. Shareholders are being asked to stump up a 264.38 plus 3p per share to bankroll the campaign. Only those who invest in the legal campaign in the UK will be entitled to any compensation.

The Treasury and the directors of Lloyds who sanctioned the merger are to be targeted in the legal action, which will focus on the massive loans made from the Bank of England to HBOS in the autumn of 2008 as the global financial crisis took hold. The campaign was boosted at the weekend when it emerged that victims of the near-collapse of insurer Equitable Life were in line for about 1.5 billion in compensation.

Jim Rai, head of litigation at legal firm Winckworth Sherwood, which is heading up the Lloyds legal action, said: "I'm hoping that the UK government will want to sit down and see what we can do to right the wrongs of the previous government. We're hoping common sense will prevail."

Campaign spokesman Adrian Lithgow told the audience: "We haven't set a target for how many shareholders we want to sign up to the campaign, but we are talking tens of thousands."

Lloydsinsists it gave shareholders "thorough and appropriate information".