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Lloyds set to come under fire at AGM

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by Kay Mitchell

Shareholders in Lloyds Banking Group are set to grill the bank at today’s annual general meeting.

Directors of the bank have faced criticism from shareholders following the hasty takeover of HBOS last autumn, which left the group 43% state-owned.

The bank is expected to plunge into a loss this year, following the takeover of HBOS, which made losses of nearly £11 billion last year after writing off bad debts.

Meanwhile, Lloyds is looking to tap investors for £4 billion, which will see the bank exchange £4 billion of preference shares held by the Government in the bank for equity.

If the plan is successful, it will also reduce costs as the Treasury currently receives £480 million a year on the preference shares.

With almost 3 million private investors, Lloyds has the largest shareholder base in Britain, who collectively own just under 10% of the bank.

A new investor group, called Lloyds Action Now, is to be launched at today’s meeting and is to explore grounds for legal action Lloyds directors.

Shareholders are also set to vote on the share issue but if the plan is snubbed, the Government’s stake in the bank could soar from 43% to 65%.

However, the fundraising is expected to receive support since the shares are being offered at 38.43p – heavily discounted from yesterday’s closing price of 67.1p.

The results of the vote are expected early next week.

Meanwhile, Sir Victor Blank, Lloyds’ chairman, is expected to come under fire at the meeting with regard to the impact that HBOS has had on Lloyds TSB.

Sir Victor announced his resignation last month after he and chief executive, Eric Daniels, faced criticism following the takeover of HBOS.

A spokesperson for Lloyds Action Now said: “Lloyds TSB shareholders are rightly furious at the way their company has been mismanaged by the board and the failure of professional advisors to discover the true state of the HBOS accounts at a time when its exposure to mortgage debt was a matter of public knowledge.”

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News posted: June 5, 2009

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