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| Lloyds shareholders get legal |
Some institutional shareholders were less than enthusiastic about the takeover. For instance, the £600m City of London Investment Trust wrote to Lloyds TSB following the announcement of the takeover but prior to the shareholder vote, stating it thought the merger was not a wise move.The basis of the claim is that the prospectus did not clearly disclose the matter of a loan to HBOS of £25.4bn from the Bank of England. Jim Rai, head of litigation at Winckworth Sherwood, the legal firm representing LAN says: “The loan is described as a secret loan of last resort. If the matter was meant to be open, then why is it referred to as ‘secret’? If the matter had been fully disclosed then it would have been mentioned in the ‘Main Risks’ element of the prospectus. Why did the share price fall when the matter was publicly disclosed?
At the time of writing, acknowledgement of service of the letter for Sir Victor Blank and Eric Daniels have been received from a lawyer working for Lloyds, and from HM Treasury. However, at this stage there is no claim against the bank itself. Legally, these parties have 90 days from receipt to respond, which gives them to 2 September.
Rai indicated a preference for off the record discussions “to structure a deal”, but that if this were not possible then the case could be heard in the High Court in 18 months to two years. 
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