In 2008 there was a financial collapse of the major western countries. The failures in fact started in 2007, but became public in 2008. In October 2008 the Royal Bank of Scotland Plc and Lloyds-TSB Banking Group Plc (as it then was) both had to ask the Government for bail-out money otherwise they would collapse into insolvency. They were deemed to be too big to collapse. At the end of the financial year for 2008 Lloyds-TSB Group (excluding HBOS as its acquisition would formally occur in January 2009) had outstanding loans of £433 billion. It held £222 billion of deposits. It made a loss that year of £8.5 billion.
As the banking world fought for their very existence businesses equally had to fight. HBOS had made some terrible, terrible mistakes in the manner in which it made commercial loans. Having been created in 2001 it had created a system within which the heads of divisions were not adequately over-seen. The commercial lending team made loans that were significantly bad. The head of the division became the only person prosecuted by the financial regulator over the failure of the UK banking market. The Financial regulator and the Government simply turned a blind eye to HBOS and let them get on with making money – it transpired to be a substantial loss.
Lloyds-TSB Banking Group plc (as it then was) had been persuaded to wholly acquire HBOS Plc. HBOS was very close to collapse in 2008. Lloyds agreed to the take-over. After acquiring HBOS it very quickly found that the commercial lending team had not fallen into the same position as other UK banks. No, this division was insolvent. There was a £200 billion hole in the middle of its balance sheet, and that hole was getting bigger. The Chairman of Lloyds asked the Government to give them £20 billion to stop the entire banking group, including the HBOS businesses, from collapsing into insolvency. It was too big to fail, as was the case with RBS. The acquisition of HBOS is at present the subject of litigation by shareholders.
Financial Claims Against Lloyds, HBOS and Bank of Scotland
We set out further below the fines that the banking group has received since the 2008 crash.
Lloyds and HBOS were fined for manipulating LIBOR (and the Repo rate, though that will be unlikely to have impacted many). They were fined for specifically manipulating GBP LIBOR. The manipulation took place between May 2006 and June 2009. Most banks started moving their customers over to GBP LIBOR lending and hedging by August 2007 onwards. As such, there are a substantial number of people who have GBP LIBOR loans and hedging with Lloyds, HBSO and Bank of Scotland that were incepted during the period in which the traders at Lloyds and HBOS Treasury were actively manipulating the interest rate benchmark.
Each of such businesses may have the potential to sue the bank. However, please do read the below, as it contains important information about what makes a LIBOR claim.
The first case to be brought to Court about LIBOR manipulation was Graiseley Properties v Barclays Bank plc.  EWHC 3093 (Comm), often referred to as the Guardian Care Homes case. Permission was granted by the High Court to amend the claim to include allegations that Barclays Bank plc manipulated LIBOR. At the same time the High Court in a case known as Deutsche Bank v Unitech Global Limited  EWHC 471 (Comm) permission to amend a defence & counter-claim to include the same allegations, just against Deutsche Bank, was rejected because it was unlikely to suceed. Barclays appealed as did Unitech Global.
The Court of Appeal allowed the amendments to the pleadings ( EWCA Civ 1372).
Graiseley Properties appears to have settled out of Court. Unitech is reported as last being heard on appeal on 3 March 2016 ( EWCA Civ 119) in which their appeal against various decisions were dismissed. The Bank made a cross-appeal and requested that to accept a defence from Unitech Unitech ought to be ordered to pay $120 million into Court, as that is the amount the Bank argues is owing under the terms of the loan and hedging that were subject to the claims. The Court of Appeal agreed and so ordered. That most likely brought to an end Unitech’s claim.
The decisions of these two cases and the December 2016 decision in Property Alliance Group Ltd v The Royal Bank of Scotland Plc  EWHC 3342 (Ch) (see HERE) provide details of what a LIBOR claim can be.
In order to instruct Muldoon Britton to pursue a claim, we would need to see all of the correspondence between you and the Bank in the run up to entry into the lending and/or hedging. PAG tells us that a Court not only requires evidence that the Bank moved you from base rate to LIBOR, but also that representations about LIBOR (whether made directly or indirectly) were relied upon by you. This is an area that will require advice from a specialist solicitor. Muldoon Britton’s directors and solicitors have been working on financial claims for our entire qualified careers. We have the knowledge and expertise in assisting SMEs and sole traders to bring claims against banks. We have worked on PPI litigation, helping to make the law (see Conlon v Blackhorse  EWCA Civ 1658 which was conjoined with Plevin v Paragon at the Supreme Court). We have worked on IRHP cases. We have worked on LIBOR and FX cases. We have been quoted in the national press talking about financial claims .
Business Support Unit (BSU)
When the economy collapsed and Lloyds acquired HBOS a number of things had to happen. HBSO was insolvent. Lloyds would have become insolvent but for the bail-out by the UK Government. The economy itself started to collapse. Property prices plummeted and the vast majority of HBSO’s commercial lending was based upon property based acquisitions. Loans were made at 75% to 100% Loan To Value. When the value of the security held by the bank collapsed the commercial loans became 100% – 150% LTVs, and as such were technically insolvent. Many SMEs were able to carry on paying their loans (though default rates rose significantly) the fact that the security held was not equal to the amount lent, the loans either had to be cancelled or more security provided.
Lloyds, as noted, found a £200 billion hole in HBOS’s accounts. That hole was the loss of security and the default rates of commercial loans. The Bank was technically insolvent. Lloyds had no option but to look again at commercial loans secured by way of property.
Things happened slowly at Lloyds, but much faster at HBOS. People who had been long-term customers at both banks suddenly found the banks’ attitude hardened and the bank started to default a lot of loans and move their companies into business support.
After a couple of years of constantly having to provide more and more information to the Bank, those that could not reduce their loans or provide more security or could not move to another bank, were informed their loans had been sold to Cerberus (see below) together with the security held. Some accounts of what happened at Lloyds have been harrowing.
There are a number of claims that emanate from Lloyds/HBOS Business Support. They are largely the same as RBS GRG claims, but were created over a much longer period and, sadly, more often than not resulted in insolvency or the loss of the business when the loans and security were sold to Cerberus.
If you have any issues with Lloyds and HBOS and how they treated you in Business Support, please contact Muldoon Britton today on 0161 826 6922. Muldoon Britton specialises in commercial claims against the banks. We are a litigation only firm, and we have no conflicts with any of the banks.
Cerberus is a US based vulture fund. They have bought billions of pounds of alleged defaulted and “toxic” loans and security from UK banks, amongst many others. They have consistently been ranked as the biggest buyers of loans in the UK for the last few years.
When the economic collapse happened in 2008 a lot of loans were found to no longer be viable. That is because many of the banks, RBS and HBOS/Bank of Scotland included, had lent billions against real estate security. They were sold at 70/75% LTV rates, though some were higher. When the collapse happened, property prices plummeted. Banks no longer wanted to lend against real-estate acquisitions and would only entertain LTV rates of 50 to 60%. The banks needed to off-load the existing loans, but make some capital back on those loans. The biggest problem has been those whose security did not actually reduce, but Lloyds’ valuations showed incredible falls in values that did not, allegedly correlate with real world values. The same issue has been raised in regards to RBS’s customers in GRG.
RSB took the decision that it would simply re-structure the loans by demanding loans be paid down by selling assets and the loans were re-issued in LIBOR, with a larger interest margin and more security. Those that could not were put into insolvency processes. More recently RBS has started to sell loans to Cerberus. RBS’s Ulster Bank has sold very large portfolios to Cerberus following the success of Lloyds/HBOS and Clydesdale/NAB in doing so.
Lloyds took a different approach. Their customers, like RBS’s, found their loans in default when new valuations of assets showed they had plummeted. Over a period of two years they were constantly required to provide more and more information. Eventually they were told to re-bank or their loans would be sold. For those that could not, they were advised that their loans & Security had been sold to Cerberus.
Lloyds and HBSO have every legal right to sell a loan if they so wish, even if the loan is not defaulted. It is in almost every loan & security document. Cerberus is entitled to buy loans legitimately being sold.
The allegations made by those in BSU (Lloyds’ Business Support Unit) are that the valuations did not agree with what the owners thought the properties were worth. They claim that the bank acted improperly when defaulting the loans. Some allege that Cerberus has acted improperly when the loans and security were acquired. Some businesses make complaints about the insolvency (see for instance Re: Angel Group  EWHC 3624 (Ch)).
If you have a Lloyds BSU/Cerberus case and would like to discuss it, please contact Muldoon Britton on 0161 826 6922.
Regulator Fines Against Lloyds, HBOS and Bank of Scotland
Lloyds Bank Plc and HBOS Plc/Bank of Scotland have been subject to the following fines:
19/02/2013: A failure to properly deal with PPI complaints. £4,315,000 fine
11/12/2013: Lloyds & Bank of Scotland were fined because their incentivisation programme (ie the bonuses they paid) caused inappropriate investment products to be sold. Combined fine of £28,038,800.
28/07/2014: Lloyds and Bank of Scotland Fined for manipulating LIBOR and Repo rates. Total fine £105,000,000.
28/07/2014: Lloyds Banking Group and Lloyds Bank were fined for manipulation LIBOR in the United States. Total fine $105 million.
05/06/2015: Lloyds Bank and Lloyds Banking Group once again fined for not dealing with PPI complaints properly. Total fine £117,430,600.
 FCA Fine for LIBOR manipulation
 CFTC Fine
 Property Alliance Group Ltd v The Royal Bank of Scotland Plc  EWHC 3342 (Ch) 21 December 2016
 National Press:
The Times 8 March 2014 “Money Made Easy: Five-minute guide to…”
The Times 5 October 2013 “Money Made Easy: Five-minute guide to…”
The Sunday Times, Ireland, 6 October 2013 “Money Made Easy: Five-minute guide to…”
The Times 12 October 2012 “The usual PPI suspects”
Kalvin P. Chapman
The Times 9 July 2014 “Mis-selling payments branded ‘ridiculous’”
Financial Times 21 December 2012 “Win for RBS in rate swaps case”
FT Advisor 6 January 2016 “FCA defends dropping banking review”
FT Advisor 13 January 2016 “Banking culture is a matter for individual firms: FCA”
 No final decision has been made by the Courts about the process involving Cerberus and various banks. The Treasury Select Committee has raised concerns, primarily in regards to Northern Rock’s sales of residential mortgages to Cerberus.
See the correspondence:
Letter from Andrew Tyrie MP to Harriet Baldwin, 15 December 2015
Letter from Harriett Baldwin to Rt Hon. Andrew Tyrie MP, 15 January 2016
Letter from Rt Hon. Andrew Tyrie MP to Sir Amyas Morse, 25 February 2016