Wednesday 8 April 2015

Mega deals are back in vogue...and so are the rows with British banks over mis-selling and Libor

I realise today has been all about the return of the "mega deal" - see Shell's £47 billion purchase of BG Group or Mylan's $30 billion takeover offer for Perrigo - but I also noticed that a fresh legal claim against Lloyds Banking Group appears to be getting significant traction in the mainstream press.

Earlier this week my old Telegraph colleague Harry Wilson, now City Editor at The Times, revealed in his publication that Guardian Care Homes - run by Gary Hartland, the man who cost Barclays £40 million as part of a settlement over interest rate swap mis-selling - has launched a new legal claim against Lloyds.

According to Harry's article, "Guardian is asking for more than £8 million from Lloyds despite having reached a settlement with the bank in 2011". This is because news of the of the bank's involvement in Libor rate manipulation have give Guardian grounds to a legal case, according to Guardian.

Here is a link to Harry's article in The Times

The Daily Mail swiftly followed up Harry's piece today with its own article reporting Lloyds is facing a "bruising battle" with a care homes operator that has "accused it of selling complex financial instruments linked to the rigged Libor interest rate".

Here is the link to The Daily Mail piece:

Lloyds, though, appears to be taking the line that because Lloyds settled with Guardian in 2011 there is no case to answer. A spokesperson for the bank said:

As the matter is now subject to legal proceedings, it would be inappropriate to comment in any detail. However, having previously agreed a full and final settlement with the customer in 2011, we do not believe the matter has any merit and it will be vigorously contested.”

But will that line of argument stand up given the recent ruling in the High Court between a company called Eagle Strategic Property and Lloyds? Eagle was looking to tear up its settlement agreement on the basis of Libor manipulation but Lloyds objected, arguing that it already agreed a settlement, and asked for the court to strike out the claim.

Guess what? The judge refused to strike out the claim.

A spokesperson for Lloyds said:

No substantive decision regarding the issues in dispute has been made by the Court. We cannot comment further whilst the matter remains ongoing, other than to say that we continue to believe the claim is without merit and the Group will be contesting the matter vigorously.”

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