What did Gordon ask Lloyds TSB to do?
Former shareholders of Lloyds TSB are demanding to find out what role Gordon Brown had in urging the bank to buy HBOS.
During the heights of the financial crisis, the prime minister had informal discussions with the Lloyds TSB chairman Sir Victor Blank about saving HBOS.
Lloyds Action Now - which is aiming to get compensation for shareholders who lost out because of the deal by chasing directors, advisors to the deal or even the government which pushed aside competition laws to allow the merger - is now trying to find out what involvement the government had in the deal.
The group has sent a Freedom of Information request to the Cabinet Office calling for details of all communications between the prime minister, ministers, and officials - including those at the Financial Services Authority (FSA) and the Bank of England - to Lloyds TSB and HBOS staff regarding the merger.
The action group hits out at "excessive government secrecy and lack of transparency and explanation" over the deal.
The body also hit out at regulation, which it claims, was "directly or indirectly responsible for the losses of HBOS increasing to the point of insolvency" and that government support for the deal meant proper due diligence was not taken out.
Lloyds TSB chief executive Eric Daniels told the House of Commons Treasury Select Committee earlier this year very considerably less due diligence occurred on the deal than would be normally expected.
A spokesman Lloyds Action Now said: "The fact that the British economy may well have been pulled from the brink can only be applauded.
"The problem is that the people who have paid the price for its rescue are the shareholders of Lloyds TSB who have had the value of their investments slashed and their dividend income, on which many thousands depend, stripped away."
He added: "Had the extent of HBOS's problems been placed fully in the public domain and made clear through due diligence and in the merger prospectus it is unlikely shareholders would have voted the merger through."
Yesterday it was reported losses at Lloyds Banking due to the merger of Lloyds TSB and HBOS could rise to £20 billion this year.
In February it was revealed HBOS saw a pre-tax loss of £10.8 billion for 2008.
Comments
Newsletter sign up