Lloyds takes £100m HBoS hit as FCA resumes probe

Lloyds Banking Group said it expects compensation for “economic losses, distress and inconvenience” related to the HBoS Reading scandal will be about £100 million and that a provision for that amount will be included in its first quarter statement on April 27.

Lloyds — which owns Halifax and Bank of Scotland — said it had “already suffered losses and-or provided for at least £250 million of credit losses in relation to those impacted cases at HBOS Reading in previous financial periods.”

Separately, the UK’s Financial Conduct Authority (FCA) said it would resume its investigation of the case.

Lloyds Banking Group chief executive António Horta-Osório said: “As I have stated before, we would like to express our deep regret and apologies to any customers directly affected by the criminal behaviour of these individuals.

“We are absolutely determined that victims of the crimes committed at HBOS Reading are fairly, swiftly and appropriately compensated.

“We take responsibility for putting right the wrongs that were committed at HBOS Reading at the time.

“That is why today we are providing an additional package of measures to ensure that customers have all the help they need as we resolve their cases as quickly as possible.”

The FCA announced it was investigating “events surrounding the discovery of misconduct within the Reading-based Impaired Assets team of Halifax Bank of Scotland (HBOS).”

“This resumes an FCA investigation that was placed on hold in early 2013 at the request of Thames Valley Police pending the outcome of the Thames Valley police investigation and any resulting prosecutions,” said the FCA.

“The FCA’s investigation is focussing on the extent and nature of the knowledge of these matters within HBOS and its communications with the Financial Services Authority after the initial discovery of the misconduct.”

The FCA added: “Six people were jailed for a total of 47 years and nine months following a six year Thames Valley Police investigation into a complex multi-million pound corruption and fraud case involving HBOS bank employees and private business advisors dating back more than a decade.

“Five people, four men and a woman, were found guilty at Southwark Crown Court of corruption, fraudulent trading and money-laundering offences.

“The fraud resulted in the offenders profiting from hundreds of millions of pounds at the expense of businesses and a high street bank and its customers.”

Lloyds Banking Group also announced it will appoint a senior independent lawyer “to consider whether the issues relating to HBOS Reading were investigated and appropriately reported to authorities at the time by LBG, following its acquisition of HBOS.”

The independent legal assessment will cover the period following HBOS’s acquisition by Lloyds in January 2009, through to the conclusion of the criminal trial.

Lord Blackwell, Lloyds Banking Group Chairman, said: “We deeply regret the criminal actions which have caused such distress for a number of HBOS business customers.

“Our first priority after the trial has been to focus upon getting customers compensation.

“To reassure our customers, stakeholders and shareholders, it is incumbent upon us to confirm we have acted appropriately.

“As such, it is the right thing to do to consider the group’s actions during this period taking account of evidence that came to light in the trial.”