Lloyds shareholders instruct Winckworth Sherwood to take action against the bank

A group of former shareholders in Lloyds TSB has turned to Winckworth Sherwood as it prepares to launch legal proceedings against the bank.

Lloyds Action Now (LAN) has been set up to seek compensation from Lloyds and HBOS directors over alleged losses they suffered following the former’s takeover of the latter.

The group said it was pursuing a number of possible legal actions after Lloyds directors admitted openly that the bank’s merger with HBOS, which was agreed in September last year, went ahead without reasonable due diligence.

After the merger Lloyds discovered toxic debts in HBOS’s accounts totalling £15.8bn. This caused the collapse of the bank’s share value and forced the Government to take up to a 70 per cent stake in the merged bank.

The Government then suspended all dividend payouts until its preference shares had been bought out.

In a statement the company said: “Possible causes of action include negligent misstatement by Lloyds directors in the merger prospectus, the withholding of information by HBOS directors, a judicial review of the Government’s conduct and a derivative action against Lloyds’s banking and accountancy advisors.”

The launch of LAN will coincide with the annual general meeting of Lloyds Banking Group tomorrow (5 June).