Shareholders in Lloyds Banking Group, including both former Lloyds TSB and HBOS shareholders, have formed an action group with the UK Shareholders Association (UKSA) over the position of the bank since the HBOS takeover.
According to the UKSA, original Lloyds TSB shareholders feel that their views were ignored over the HBOS
deal, in favour of the Government and HBOS's wishes.
The UKSA added that several knowledgeable Lloyds TSB
shareholders had advised directors that the takeover was a mistake due to HBOS's commercial property mortgage
Last week, Lloyds Banking Group
revealed that the Government would be insuring £260billion in toxic debts, most of which were inherited from HBOS.
Commenting on this, UKSA said: "The prime motivation for this seems to be the desire of the Government to increase lending by the bank, which may be in the interest of the wider economy, but is to the disadvantage of shareholders unless done on proper commercial terms.
"UKSA also suggests that there are better alternatives that the company and the Government should have considered, that would not have prejudiced shareholders to the same extent."
The action group will be considering ways to oppose further erosion of shareholder value and increasing the Government's stake in the bank – it emerged last week that the Government will soon hold a 65 per cent stake in Lloyds Banking Group.
Commenting on the banking sector in general, the UKSA
said: "The banking crisis has detrimentally affected all stakeholders, and has had a very wide impact upon our society leading to a massive recession and potential depression.
"This has affected businesses and households leading to some corporate collapse and personal bankruptcies, loss of homes, impairment of pensions
and reduction in taxable income across the economy."
The group added that it is opposed to the nationalisation of banks, but requests a proper investigation into what took place and accountability for error where it is obvious.
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