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Lloyds Shareholders Say Mandelson 'misled Courts' Over Secret Loan

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Lloyds shareholders say Mandelson 'misled courts' over secret loan

http://www.citywire.co.uk/money/lloyds-shareholders-say-mandelson-misled-courts-over-secret-loan/a482050?ref=citywire-money-latest-news-list

A group of Lloyds shareholders are suing for the money they lost when the bank bought HBOS at the height of the financial crisis.

The Lloyds Action Now group, which has around 4,000 members, say the deal would have been blocked by the courts if the then business secretary Peter Mandelson had disclosed information about a secret £25.4 billion loan.

Lloyds bought HBOS in 2008 as fears grew that the bank would topple under the weight of the loans it had written, forcing Lloyds to go cap in hand to the government for a bailout.

In the meantime, the Bank of England had been lending HBOS money to keep it afloat but kept the information secret. The news wasn't included in the merger documents and only emerged long after the deal had been approved.

The value of Lloyds shares tumbled and the bank was forced to suspend dividend payments.

Later the European Competition Commission ruled that Lloyds would need to sell 19% of its newly enlarged mortgage business because the deal had given it a share of the market that would not have been approved in normal market conditions.

When the news of the secret loan finally broke, MPs said it was clear shareholders had been misled but 'Lloyds Action Now' is now claiming they weren't the only ones.

The group say the merger would not have gone through if Mandelson had not withheld information about the loan at a court hearing into the deal ahead of the merger.

Lloyds Action Now believes the failure to disclose the loan, which its lawyers say constituted illegal state aid, could have seen the merger declared illegal.

The group says up to 800,000 shareholders lost a total of £2 billion between them because of the deal.

The group has asked the current business secretary Vince Cable to release the files which show what information was handed over to the courts. It also lodged a claim in the High Court on Friday alleging illegal state aid by HM Treasury and the Bank of England and misrepresentation by Lloyds directors.

Funding Gap

Separately, the Sunday Times reported there is a £30 billion funding gap at the branches Lloyds wants to put up for sale. That is the difference between outstanding loans and customer deposits. Until that difference is made up the group is likely to find it difficult to secure willing buyers, the newspaper reported.

When RBS sold 700 branches last year a number of would-be bidders including Virgin Money and National Australia Bank dropped out, leaving the way open for Santander to buy them

Critics say that did little to improve competition in the UK as Santander had already bought Abbey banks and parts of Alliance & Leicester and Bradford & Bingley.

And the Sunday Times said if the investment banks won't help Lloyds plug the financing hole at its branches, only the largest international banks would be able to buy them.

That means National Australia Bank, which already owns Clydesdale and Yorkshire Banks, would still be in the running but NBNK, the newly formed bank investment group, would be forced to drop out of the race, the paper said.

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Yep, twas pure, brazen theft. If it wasn't, Lloyds shareholders would have at least had a chance to sell before it was too late.

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Yep, twas pure, brazen theft. If it wasn't, Lloyds shareholders would have at least had a chance to sell before it was too late.

I sold at a small profit (and later traded at a bigger profit) B)

Lloyds shareholders shouldn't have had to sell. The bank was going through hard times, but before HBoS it was in better shape than Barclays and not in danger of going bust.

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Separately, the Sunday Times reported there is a £30 billion funding gap at the branches Lloyds wants to put up for sale. That is the difference between outstanding loans and customer deposits. Until that difference is made up the group is likely to find it difficult to secure willing buyers, the newspaper reported.

That is really going to help increase the number of mortgage approvals ;)

More detail:

Lloyds banking Group is to receive a £15 billion loan from Citigroup and JP Morgan to help with its sell-off of 600 branches. An estimated shortfall between mortgages and customer deposits of between £20 billion and £40 billion is to be bridged by the funding, with the difference expected to be reduced to £20 billion by the time a sale takes place in two years. The bank announced that Citigroup and JP Morgan were to advise on the sale and had also been earmarked as potential funding providers.

The loan is equivalent to £25m a branch and a funding gap of £33-67m a branch

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Yep, twas pure, brazen theft.

+1000

I couldn't believe it when I heard it. If I had been a Llyods shareholder I woud have...well, best not to say.

However, what do you expect from the state?! It was just a little bit more blatant this time.

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Theft, at least on a grand scale and involving public money and banksters, is not a crime in this country.

Putting the wrong sort of rubbish in the wrong bin is however.

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+1000

I couldn't believe it when I heard it. If I had been a Llyods shareholder I woud have...well, best not to say.

However, what do you expect from the state?! It was just a little bit more blatant this time.

yup, McRuin's finest hour? Sir Victor Blank walked for that one pretty sharpish, I cannot believe what he was thinking.

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This issue is likely one reason for the inclusion of the following clause in the Banking Act 2009:

244 Immunity(1) The Bank of England has immunity in its capacity as a monetary authority.(2) In this section –    (a ) a reference to the Bank of England is a reference to the Bank and anyone who acts or purports to act as a director, officer, servant or agent of the Bank,    (b ) “immunity” means immunity from liability in damages in respect of action or inaction, and    (c ) a reference to the Bank’s capacity as a monetary authority includes a reference to functions exercised by the Bank for the purpose of or in connection with –         (i)  acting as the central bank of the United Kingdom, or         (ii) protecting or enhancing the stability of the financial systems of the United Kingdom.(3) The immunity does not extend to action or inaction –    (a ) in bad faith, or    (b ) in contravention of section 6(1) of the Human Rights Act 1998.

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(a) It wasn't the BoE that conducted the Lloyds shareholder vote and associated communications.

(B) The bad faith clause seems to make BoE immunity a pale shadow of judicial immunity. On the subject of blatant deception, this could be relevant.

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TBH you could stick in virtually any politician from any party and get the same effect (apart from maybe a few honorable exceptions like Michael Foot, Frank Field, Ann Widdecombe, Tony Benn, etc.).

I take it you're too young to have witnessed Benn in ministerial office?

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Thats an awful image of Brown Mandelslime and Balls.

who is the one on the left?

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