Justice, at long last

The former Lloyds bosses, Eric Daniels and Sir Victor Blank are to be sued for their role in the takeover of HBOS in 2008. The claim forms have been lodged by US based shareholders of Lloyds banking group who are unhappy with the manner in which the company took over HBOS at the height of the credit crisis and just days after the Lehman brothers fell into administration.

The claim forms which have been lodged with the Southern district of New York accuse the bank’s board, of making misleading statements about the solidity of the transaction and making false promises to employees.

(left) Andy Hornby, (centre) Sir Victor Blank, (right) Eric Daniels

The transaction in September 2008, led to a massive fall in the prices of Lloyds shares, falling from 279.75p on the day of the purchase of HBOS to 108p a year later. Although, the two bosses have always defended the deal, with Sir Victor saying that the problem ‘was the speed with which the economy went into recession, pulling down HBOS with it’. The simple truth of the deal is that the Lloyds ‘big wigs’ got greedy.

By purchasing HBOS in the £12billion deal, Lloyds aimed to create a new super bank which would corner over a third of the UK’s savings and mortgage market. But, Lloyds overvalued the shares of HBOS by purchasing them for 232p per share (they were only valued at 147.1p at the close). This meant that when Lloyds were forced to overwrite some of HBOS’s debt they were unable to as they did not have enough reserve funds and in 2009 were forced to record a £4billion loss. Due to this over 40,000 people were made redundant, causing much distress and only inflating unemployment figures, which in turn harmed the UK economy.

Having been close to someone who has been directly affected by the decisions made by Eric Daniels and Sir Victor Blank those three years ago, I personally feel that it is about time that justice is finally carried out and these two men are punished.