BREAKING NEWS

BREAKING NEWS

Former FSA chief Sants denies pressurising Lloyds over HBOS

Now Reading:

Former FSA chief Sants denies pressurising Lloyds over HBOS

Former FSA chief Sants denies pressurising Lloyds over HBOS
Text size Aa Aa

By Kirstin Ridley

LONDON (Reuters) – Britain’s markets regulator did not shepherd Lloyds Banking Group towards buying struggling peer HBOS during the financial crisis in 2008 although it supported the deal, its former chief executive told London’s High Court on Thursday.

Hector Sants, the chief executive of the now defunct Financial Services Authority (FSA) from 2007 to 2012, told a court case brought by thousands of Lloyds shareholders that the regulator was focused on ensuring banks were adequately capitalised to weather roiling markets.

“Obviously, if Lloyds had not wanted to do the deal, we would have looked at other options,” he said.

Around 6,000 shareholders are suing Lloyds and five former executives, including ex-CEO Eric Daniels, for more than 550 million pounds in damages, alleging they concealed HBOS’s true financial state and breached their duties by recommending the purchase nine years ago.

The government-brokered takeover, which saved HBOS from a state bailout, valued the bank at around 5.9 billion pounds and wiped billions off Lloyds’ market value. Lloyds itself then had to be rescued with a 20.5 billion-pound bailout in 2009.

Lloyds, Britain’s largest retail bank, and the individual defendants, who include former chairman Victor Blank, Tim Tookey, the former finance director, former retail head Helen Weir and ex-wholesale banking chief Truett Tate, deny wrongdoing.

Former executives cross examined so far in the case have said the takeover was struck at commercial and appropriate terms.

In his witness statement, Sants said HBOS had been unlikely to survive as an independent institution in markets that had already witnessed the collapse of Wall Street’s Lehman Brothers in September 2008.

But he added: “However, I emphasise that whilst the FSA may therefore have been supportive of the acquisition it did not in any way intend to pressurise Lloyds, overtly or otherwise, into acquiring HBOS.”

After leaving the FSA, Sants joined Barclays but left soon afterwards, suffering from stress. He is now a partner and vice chairman of management consultancy Oliver Wyman.

($1 = 0.7444 pounds)

(Reporting by Kirstin Ridley, editing by David Evans)

euronews provides breaking news articles from reuters as a service to its readers, but does not edit the articles it publishes. Articles appear on euronews.com for a limited time.