A former Lloyds director who wrote a note saying there was “no value left in HBOS” at the height of the 2008 banking crisis has denied his “jottings” meant that the bank was worthless.
Archie Kane, who was insurance director of Lloyds and has been governor of Bank of Ireland since 2012, was giving evidence in the high court in London about handwritten notes he made in October 2008 after the agreed takeover of HBOS.
The acquisition is the subject of a high-profile £550 million (€620 million) court case in which 5,500 shareholders of Lloyds are suing the bank and five former directors, claiming they were not told of HBOS’s parlous financial state before they voted through the deal in November 2008. Lloyds and the ex-directors deny the claims, calling them “flawed on every level”.
Mr Kane told the high court on Monday that handwritten notes were made during a meeting of senior directors in early October 2008 in which Lloyds was considering whether the HBOS deal was still an attractive proposition as financial markets deteriorated. He denied his words implied that HBOS was worthless.
“If there had been no value in HBOS that would have been easy – we just wouldn’t have done the deal,” Mr Kane told Richard Hill QC, the barrister representing the shareholders. “You interpret these words literally. These are jottings that I just put on a piece of paper,” he added.
Mr Kane, who is not a defendant in the civil trial, is one of the first senior former directors to testify in the trial.
Blank testimony
Later this week Sir Victor Blank, the former chairman of Lloyds who helped orchestrate the deal, is due to give evidence for two days. He will be followed by Helen Weir, who at the time of the HBOS deal was head of retail banking at Lloyds but is now outgoing finance director at Marks & Spencer.
Mr Kane said his “aide memoire” notes of the meeting just reflected concerns among the board about whether the HBOS deal, which was agreed in September 2008, continued to present an opportunity for shareholders – or whether continued falling stock markets meant the deal price would have to be reduced by Lloyds.
The price of the HBOS acquisition was eventually renegotiated by Lloyds in mid October 2008 when the UK government recapitalised the banking system.
– Copyright The Financial Times Limited 2017
