Friday, June 5, 2009

Lloyds To Face Shareholder Ire

. Friday, June 5, 2009

By stockOzone team

Lloyds Banking Group shareholders are set to vent their anger over the merger with HBOS at the bank's annual meeting.

Although investors approved the takeover, some shareholders are exploring grounds for legal action against Lloyds directors.

Shareholders are also voting on a share issue. If they snub the offering, the government's stake in Lloyds could rise from 43.4% to 65%.

The results of the vote are expected next week.

Sir Victor Blank, Lloyds' chairman, is expected to field questions about the impact that HBOS has had on Lloyds TSB at the meeting in Glasgow.

Last month, Sir Victor said he would step down as chairman of Lloyds Banking Group by June 2010.

Sir Victor and Lloyds' chief executive, Eric Daniels, have faced criticism for their decision last year to buy HBOS, the troubled owner of Halifax.

HBOS made £10bn of losses last year and Lloyds has put £260m worth of toxic assets, mostly from HBOS, into a government-backed insurance scheme.

Pension pressure
A group called Lloyds Action Now set up to find ways to recover shareholders' losses as a result of the takeover will be launched at the meeting.

"Lloyds TSB shareholders are rightly furious at the way their company has been mismanaged by the board and the failure of professional advisors to discover the true state of the HBOS accounts at a time when its exposure to mortgage debt was a matter of public knowledge," the group said.

Lloyds is also likely to face pressure over its pension scheme.

The biggest union in Lloyds has demanded the bank provide a written guarantee it will keep open its final salary pension for the scheme's existing 30,000 members, the Financial Times reported.

The report comes after Barclays closed its final salary pension scheme to existing members.

Disclosure: Author does not own any of the stocks discussed here.

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