Blank says sorry to Lloyds investors

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Sir Victor Blank, chairman of the Lloyds Banking Group, has apologised to shareholders for the effects of the bank's hastily arranged, and government brokered, takeover of HBOS.

At the bank's annual meeting in Glasgow yesterday, Sir Victor, who survived the vote to reelect him as chairman, refused to admit that January's takeover, which exposed Lloyds to HBOS's toxic loan book, was a mistake, and said that sufficient due diligence had been done before the deal closed.

Lloyds' shares have fallen 76 per cent in the last year, while the dividend has been suspended.

At the meeting one shareholder asked the chief executive, Eric Daniels, how he "miss[ed] an elephant in the room," referring to HBOS's struggling investments. Mr Daniels, who unlike Sir Victor has not signalled his intention to stand down, insisted that Lloyds had been aware of the problems facing HBOS, and had "taken precautions".

The UK Shareholders Association (UKSA), which represents Lloyds' private shareholders, said that legal action against the bank, and possibly individual members of the board, was inevitable: "If Sir Victor is expecting to retire quietly next year and avoid lots of meetings with lawyers, he can think again," Roger Lawson, a spokesman for UKSA, said. Lloyds said it would defend any action.