Lloyds share price: Bank would have not bought HBOS if fraud was disclosed

on Apr 10, 2017
Updated: Mar 11, 2020

Lloyds Banking Group (LON:LLOY) would not have proceeded with the disastrous acquisition of HBOS had it known about the fraud at the bank’s Reading office, The Times has revealed. The report comes after the FTSE 100 lender, bailed out by the UK government during the financial crisis, said last week that it expects compensation payouts for victims of the scheme run by two former HBOS bankers to reach £100 million.

Lloyds’ share price lost ground on Friday, shedding 0.90 percent to close at 63.02p, underperforming the broader London market, with the benchmark FTSE 100 index adding 46.17 points to end the session 0.63 percent higher at 7,349.37. The lender’s shares have lost more than three percent of their value over the past year, and continue to trade below the taxpayer’s breakeven price of 73.6p.
The Times revealed today that a report written by a senior Lloyds employee had concluded that it was ‘highly probable’ that the HBOS acquisition would ‘not have proceeded’ if what was known by the failed bank’s executives about huge lending irregularities had been disclosed before a £4-billion rights issue in 2008.

Thames Valley police, which investigated the report, estimated the scale of the scam at £1 billion. About 100 small-business owners had their livelihoods wrecked by the crime, and six people were jailed in February over the fraud. The newspaper notes that report is understood to suggest that there may have been suspicions within HBOS about lending irregularities linked with Reading as early as 2004.
Lloyds noted that the report was produced by a former employee and was not requested or sanctioned by the group.
“The document contains many unsubstantiated allegations about individuals, auditors, regulators, as well as HBOS, the majority of which are made without any supporting evidence,” the bank told The Times.
As of 07:46 BST, Monday, 10 April, Lloyds Banking Group share price is 62.98p.