Lloyds Banking Group (LBG) is facing a new lawsuit from the Lloyds Action Now shareholder group, who accused the British banking behemoth for providing misleading information over the acquisition of HBOS.
The UK government facilitated the acquisition of HBOS by Lloyds TSB at the height of the financial crisis in 2008.
It is believed that the case might turn into one of the largest in terms of damages ever heard by the English courts, as reported by The Financial Times.
Lloyds has, however, vowed to defend itself against the lawsuit filed in London, which accused it of withholding key information and misleading the shareholders into approving the merger.
Investors claim that £25bn of emergency support from the Bank of England (BoE) for HBOS and $18bn from the US Federal Reserve was not disclosed by Llyods. In addition, the bank also covertly offered HBOS with £10bn in loans to keep it afloat.
The investors have requested the court to issue group litigation order, which will enable thousands of similar investors to join the claim, potentially increasing its value to £12bn.
A statement by Lloyds was cited by the Financial Times as saying: "The group’s position remains that we do not consider there to be any legal basis to these claims and we will robustly contest this legal action."
Legal woes are mounting up for LBG, as the bank was fined £218m by the US and UK authorities in July 2014, to settle Libor benchmark rate manipulation case.
