Lloyds bosses underfire from shareholders

Jun 6 2009 by Peter McCusker, The Journal

ANGRY Lloyds Banking Group shareholders slammed the bank’s bosses over their takeover of HBOS at the annual general meeting in Glasgow.

One investor told the meeting yesterday the acquisition of the bank along with its toxic assets in autumn last year was “a disaster“.

Another called on chairman Sir Victor Blank to resign immediately.

Sir Victor – seen as the public face of the merger – has already announced he will step down next summer.

Lloyds, which is 43.4% owned by the Government, has called on its investors to take part in a £4bn fundraising offer.

The result of the vote – in the next week – is crucial for the bank because if shareholders snub the offer the Government may end up owning 65%.

A shareholder said of the HBOS takeover: “It is absolutely preposterous that this has happened. How on earth were these toxic assets missed, why weren’t the shareholders told about them. This is a disaster.”

Chief executive Eric Daniels told the meeting that his team was clear when recommending the HBOS merger to the board of directors that it was a “higher-risk portfolio“.

He said: “What has happened subsequently is the economy has turned down far more sharply than anyone had forecast at the time.”

Sir Victor said he continued to believe that the decision to take over HBOS was the right one and that Lloyds’ position as “the UK’s leading provider of credit cards, loans and mortgages” would not have been possible without it.

He said the transaction would benefit shareholders in the “medium term“ but apologised for its current effects. “The board and I are sorry about the decline in our share price and the financial difficulties that the temporary suspension of our dividend has caused shareholders,” Sir Victor said.

Calls were made at the meeting in Glasgow for him to step down, with one investor calling Sir Victor a “weak, greedy, selfish charlatan“.

Sir Victor said he was not planning to change the arrangement for his departure but made clear he would not be taking any “pay-off“ when he left.

But he added: “I’ve asked my colleagues, when the day comes when you, the shareholder, recognise the merits of what’s happened, I hope that they will invite me back and buy me a couple of beers.”

Lloyds has around 2.8m private shareholders, who together own just under 10% of the bank.

But other shareholders offered Sir Victor support, with one man saying he is a “man of vision” and is “altruistic and honourable”, before adding that his retirement would be “a loss to all of us”.

During the three-hour meeting, union representatives called for reassurances over the group’s final-salary pension scheme and asked the bank to bring back jobs from India to help reduce unemployment in the UK.

Lloyds TSB Group Union says 5,000 administration and IT jobs have been offshored to India in recent years and that it is demanding the bank moves the jobs back to the UK.

The union’s assistant general secretary Mark Brown said: “Lloyds Banking Group is going to haemorrhage thousands of good, well-paid jobs over the next few months.

“The Lloyds Banking Group board... must now abandon its policy of offshoring jobs to India.”