HBOS reports don’t go far enough, says Lloyds shareholder group

The Telegraph 

Halifax Bank of Scotland was rescued by Lloyds in 2008

About 6,000 investors are taking part in legal action against the bailed-out bank

The damning report into the collapse of HBOS has this week shed more light on the bank’s rescue by Lloyds, but some disgruntled shareholders believe it has not got to the bottom of the ill-fated deal.

A shareholder action group, which is suing Lloyds and several former directors for damages, welcomed the long-awaited report that blamed bankers, regulators and politicians for the demise of the banking group in 2008.

“The report is supportive of our claim but it doesn’t go far enough. It conveniently stops at 1 October and does not deal with the circumstances or consequences of the Lloyds acquisition,” said one shareholder involved in the lawsuit. “We lost billions as a result of the HBOS deal and we are keen to uncover why, if HBOS was such an obvious disaster, the deal went through with the government’s blessing and encouragement.”

About 6,000 claimants, represented by law firm Harcus Sinclair, are due to have their case for £350m in damages heard in court late next year. They argue they were misled about the financial health of HBOS before a vote on the takeover by Lloyds, which required a taxpayer bailout in early 2009 cope with its toxic loan books.

Meanwhile, Ross McEwan, chief executive of RBS, said that HBOS’s failure stemmed from prioritising growth over customers. “All the basic seems to be completely thrown out of the window in those days. We’ve got it back to being good solid things that people can trust again,” he said on LBC radio.

Up to ten former HBOS bankers could be banned from working in the City, after the financial regulators pledged in the wake of the report to re-examine the penalties levelled against those involved. To date, just one executive has been fined for the failure of the bank.

The KPMG auditors who signed off HBOS’s accounts are also facing renewed scrutiny. Andrew Tyrie, chairman of the Treasury Select Committee, has said he will write to the Financial Reporting Council to find out why the bank’s audits have not already been investigated.

The committee is also expected to call Andrew Green QC, the author of a report into the now-defunct Financial Services Authority’s handling of the HBOS investigation, and representatives of the Financial Conduct Authority about the findings of the new reports.

Read the reports in full

PRA/FCA report in to the collapse of HBOS

Andrew Green QC report in to FSA’s enforcement investigation

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