A senior lawmaker has demanded an investigation into the way the chief executive of Lloyds Banking Group (LON:LLOY) handled information related to fraud at the group’s HBOS Reading unit, Reuters has reported. The news comes after the bailed-out lender reached a settlement with the whistleblower who accused former bosses of concealing the scheme which saw corrupt employees at the division impose a firm of turnaround consultants on their small business customers in exchange for bribes.
Lloyds’ share price has fallen into the red in today’s session, having given up 2.29 percent to 54.94p of 09:50 GMT. The group’s shares have underperforming the broader market selloff which has seen the benchmark FTSE 100 index give up 1.12 percent to 6,971.33 points so far this Thursday.
MPs demand probe
Reuters reported last night that Kevin Hollinrake, the chairman of the parliamentary group for banking, had notified Lloyds CEO Antonio Horta-Osorio that he had written to the Financial Conduct Authority about the case involving the Reading unit of HBOS, which the bailed-out lender acquired in 2009. Hollinrake noted that he had asked the regulator “to open an investigation of these events under the Senior Managers and Certification Regime,” a set of powers brought in after the financial crisis to better police the conduct of executives.
The newswire reports that in his letter to Lloyds’ CEO, Hollinrake had alleged that internal bank correspondence showed that Horta-Osorio was aware of the scale of the fraud “as early as 2011”, when he joined.
“Our concerns relate to the allegations of the cover-up of the fraud rather than the fraud itself,” he explained. Six people were jailed last year over the fraud, while Lloyds has set up a £100-million compensation scheme.
Analysts on Lloyds
Jefferies, which rates Lloyds as a ‘buy,’ boosted its price target on the stock from 91p to 99p this week. According to MarketBeat, the blue-chip group currently has a consensus ‘buy’ rating and an average price target of 76.72p.