Lloyds share price: Lender said not to have been pushed into HBOS merger

Former head of Financial Services Authority gives evidence in ongoing trial

Lloyds share price: Lender said not to have been pushed into HBOS merger

The former head of the City regulator has denied it leaned on Lloyds Banking Group (LON:LLOY) to take over HBOS in 2008, The Times has revealed. The comments are part of the ongoing trial which is seeing shareholders in the bailed-out lender suing the group over the acquisition which came shortly before Lloyds had to be rescued by the taxpayer.

Lloyds’ share price has been little changed today, having slipped 0.18 percent to 66.19p as of 09:50 GMT. The stock is marginally underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.04 percent in the red at 7,445.19 points.

HBOS trial continues

The Times reported that Sir Hector Sants had told the High Court yesterday that the Financial Services Authority was ‘supportive’ of Lloyds’ acquisition of HBOS on the grounds that it would help to stabilise HBOS and the wider banking system, but that the regulator “did not in any way intend to pressurise Lloyds, overtly or otherwise”. The FSA was replaced by the Financial Conduct Authority in April 2013. 

Sir Hector, who ran the FSA from 2007 to 2012, has not been charged with anything but yesterday gave evidence for the bailed-out lender, noting that from March 2008 onwards, the regulator believed “there was a significant possibility of HBOS failing in a disorderly fashion”.

The comments came after it recently emerged during the ongoing trial that Lloyds had discussed a merger with a string of banks, including the Netherlands’ ABN Amro and Germany’s Postbank, before going after HBOS.

Analysts on Lloyds

Morgan Stanley, which has a ‘buy’ rating on the bailed-out lender, set a price target of 80p on the shares this week. According to MarketBeat, Lloyds currently has a consensus ‘hold’ rating and an average price target of 71.75p. 

As of 10:11 GMT, Friday, 15 December, Lloyds Banking Group share price is 66.34p.

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