Lloyds share price: Group thought HBOS was ‘good deal’

A former Lloyds Banking Group (LON:LLOY) executive has defended the bank’s decision to buy HBOS at the height of the financial crisis, The Times has reported. The news comes amid the ongoing shareholder trial, with investors suing the bailed-out lender over the £8-billion acquisition at the height of the financial crisis, which was subsequently followed by a taxpayer-funded rescue.

Lloyds’ share price has been steady in London this morning, having added 0.38 percent to 68.20p as of 09:35 BST, largely in line with gains in the broader UK market, with the benchmark FTSE 100 index currently standing 0.22 percent higher at 7,463.59 points. The group’s shares have added more than 21 percent to their value over the past year, and are up by nearly nine percent in the year-to-date.

HBOS saga continues

The Times reported this morning that Tim Tookey, former finance director of Lloyds TSB and latterly Lloyds Banking Group, had told the High Court in London that the lender had gone ahead with the takeover as it had thought it was a good deal for investors.

“We did the deal because we believed it was in the best interest of shareholders,” he pointed out, also defending the agreement to pay a premium to HBOS’ when Lloyds bought it in September 2008, saying that the directors thought “it was an appropriate price to pay”. 

Reg flags

The newspaper further notes, however, that Alex Pietruska, former head of strategy and corporate development at Lloyds, had warned over the summer of 2008 against buying HBOS. An August 2008 briefing document written by Pietruska’s team highlighted seven ‘red flags’ to buying the bank.

The trial is set to continue until March.

The trial update comes after Lloyds posted its third-quarter results yesterday, revealing a rise both in profits and impairments for the three months ended September 30. 

As of 10:08 BST, Thursday, 26 October, Lloyds Banking Group share price is 67.96p.