Investors grill Lloyds bosses on HBOS deal
TOP executives of Lloyds Banking Group were given an uncomfortable afternoon by a large turnout of angry shareholders in Birmingham yesterday.
Though they voted 99 per cent in favour of the group’s record £13.5bn rights issue, both the chairman and chief executive were grilled repeatedly over the bank’s takeover of HBOS.
Lloyds Banking Group called on its shareholders to purchase 1.34 new shares for each existing share they own at a price of 37p.
In total, the part-nationalised bank is tapping investors for £22.5bn to extricate itself from the government-run Asset Protection Scheme (APS) and boost its balance sheet following its ill-starred takeover of HBOS last year.
Chairman Sir Win Bischoff hailed the rights issue as “significant change for Lloyds” and said it would benefit shareholders in the long-term.
He told the general meeting: “The economic environment has stabilised. Our cost synergies are ahead of forecasts and based on our trading activity to date we are confident we can improve our position in 2010-2011. I believe the rights issue is a more attractive method than the APS.”
With almost Churchillian vigour, Bischoff told the shareholders: “Let us shape our own destiny.”
However, shareholders furious over the revelation that HBOS received a £25.4bn emergency funding injection from the Bank of England gave Bischoff and chief executive Eric Daniels both barrels.
Private shareholder Brian Peer from Durham said: “The government has taken advantage of the situation under the guise of helping banks. We should have been informed at the time of how much money would be required to bail out HBOS.”
Peer’s comments echoed around the meeting, with rumbles of discontent filling the hall. Shareholders openly questioned Lloyds’ willingness to take part in the transaction to the detriment of its shareholders.
Lloyds divulged HBOS was receiving aid at the time, but failed to disclose the sum until this week. The bank stood by its decision to acquire HBOS and maintained it carried out thorough due diligence before entering into the transaction, although it did concede that it was somewhat bound by red tape regarding privacy laws.