Lloyds' boom-era bosses sue bank for bonuses

Lloyds shares now worth less than 2008 bail-out price

22 September

Lloyds Banking Group shares have continued to soften in recent days and have now dipped below the symbolic threshold marked by the price at which the government acquired its interest in the bank in 2008.

The stock was trading 1.4 per cent lower at a little above 73p on Tuesday morning, marginally below the 73.6p at which the then Labour administration acquired its 43 per cent interest at the height of the financial crisis. Having peaked at around 87p earlier this summer, the price has been heading down steadily despite bullish predictions from analysts and the promise of increased cash distribution to shareholders.

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The C Suite says this reflects a "committed" downtrend that "has legs towards 67p". Lloyds shares are now below their 20 and 50 day moving averages of 75.6p and 80.21p and the 'relative strength index', a measure that compares buying and selling activity to indicate when a stock is overbought or oversold, continues to "advocate for losses".

On the other hand, most analysts remain convinced that, with the bank maintaining its annual dividend and eyeing a potential special payout if capital reserves exceed minimums, that the stock is set for a surge towards 100p. Writing on The Motley Fool, Rupert Hargreaves suggests this could come "within six months".

Even this bullish analysis, however, anticipates a likely decline in the immediate future. Key supporting factors, such as a likely interest rate rise that would boost net interest margins, are now likely to come in later than expected, while the likelihood of a Serious Fraud Office investigation into its business division and other legal actions could act as a drag.

Lloyds shares continue slide as SFO considers probe

18 September

Shares in Lloyds Banking Group have continued to soften, as the fallout from allegations made by MPs in parliament continues to dog the state-backed lender.

The Financial Times reports that the Serious Fraud Office is giving "active consideration" to a request from Labour MPs Jo Stevens and Huw Irranca-Davies to investigate the bank, along with property consultants Alder King.

It has been claimed that smaller companies were caused to fail as a result of "manipulation" by the two firms designed to put them in breach of the terms of ultra-low rate loans agreed before the financial crisis.

The Times, which first revealed the allegations, cited the MPs' concerns over apparent "collusion" after an Alder recovery manager working on secondment with Lloyds passed one company over to an Alder receiver.

The FT says conflict of interest complaints to the bank in 2009 and 2010 "prompted Lloyds to overhaul its protocols, requiring non-staff members working in its debt recovery division to disclose in writing that they work for other companies".

Alder has separately been investigated, and cleared, by the Royal Institution of Chartered Surveyors. Both strenuously deny the allegations and any wrongdoing.

A similar scandal at Royal Bank of Scotland has prompted a long-running regulatory investigation, which will report back later this year and could result in the bank having to set up a costly compensation scheme for affected business customers.

Amid the furore, Lloyds shares were down again on Wednesday and are in the red again on Thursday, trading at just above the break-even price for the Government's ongoing share sale at 73.7p.

But Interactive Investor suggests the negative price movement, which has been set in for a number of weeks, is not related to any specific negative sentiment and is more a function of a long-term technical down trend that could "drag on for another year".

Specifically, it says the price could "relax to around 65p fairly soon" and continue "messing around between 65p and 90p for months".

However, the site adds that a fall to this level would make it "an attractive proposition for those with infinite patience", as the bank is still expected to go above 100p and even as high as 134p "in the longer term".

Lloyds shares dip amid MP allegations

17 September

Lloyds Banking Group is the subject of more negative headlines, as The Times reports that it was named in parliament by an MP in relation to allegations it deliberately put small companies out of business.

The newspaper says Lloyds and Alder King, a firm of property valuers and receivers, were accused of "daylight robbery" by Jo Stevens, Labour MP for Cardiff Central.

Stevens said the firms "colluded" to push "small businesses to the wall as the bank sought to clean up its balance sheet after the financial crisis".

Citing correspondence between one Alder recovery manager, who was "working on a part-time secondment within Lloyds' restructuring department", and an Alder receiver, Stevens claimed customers with low rate loans agreed pre-crisis were "targeted and eliminated".

This was done by manipulating the value of properties against which loans were secured to breach loan-to-value ratios on the debt, according to Stevens.

MPs called on the SFO to provide an update on the case, which follows complaints by two Lloyds customers.

The allegations were strenuously denied by both the bank, which described them as "completely baseless", and Alder, which has previously been cleared of wrongdoing by its industry body, the Royal Institution of Chartered Surveyors.

The case has echoes of the scandal involving Royal Bank of Scotland's Global Restructuring Group, the unit which dealt with stressed businesses and which is similarly accused of increasing strain on struggling businesses to charge higher fees and claim assets.

RBS is subject to a regulatory review by the end of this year that The Herald notes could result in it being forced to "establish a compensation scheme for effected firms".

Lloyds is separately engaged in two costly legal actions. In one case it is fighting against bondholders to in a bid to cancel high-interest paying policies and save up to £1bn over the coming two decades

In another case, the bank is defending itself against a former Libor trader, who was sacked in the wake of an investigation into rate rigging but who is claiming he was removed for whistleblowing - as The Guardian reported.

Shares in the bank, which analysts have said could soar in the coming months as dividends are ramped up, have held low over the past week and were trailing 1.5 per cent on Thursday morning at 74.4p.

Lloyds seeks to head off competition probe

14 September

Lloyds Banking Group, which is facing a competition probe that could result in the high street giant being split up, is hoping to stave of some criticism with a tool designed to increase current account switching.

Lloyds has shown the Competition and Markets Authority (CMA) a "prototype" of a "sophisticated price comparison system", which it believes could be adopted across the industry, reports The Guardian. It would make comparing current accounts "as straightforward... as it is to evaluate home insurance policies or mortgages", but would require a change to rules "to require banks to share information about their customers".

The system could present a single view of the combined cost of different accounts, taking into account an individual's levels of savings and spending on other financial products. Research has shown 55 per cent of customers find it difficult to compare the costs of accounts, which include interest rates, overdraft and other fees, and add-ons including cashback and insurance cover.

The CMA has been investigating the banking sector amid concerns over the domination of the 'big four' – Lloyds, Royal Bank of Scotland, Barclays and HSBC – in personal and small business banking. Between them the four banks hold 75 per cent of all current accounts with Lloyds the clear market leader. "At its most extreme", the Guardian says, the probe could recommend these big banks are split up.

Smaller challenger banks have criticised the CMA study, saying it is taking a "conservative" line that will leave the big four unchallenged. The Daily Telegraph notes many of these smaller banks would like to see the regulator recommend a major easing of regulations, including those governing costly capital reserves, for smaller lenders that do not pose systemic risk.

Lloyds customers told to take out fraud cover after breach

10 September

Lloyds Banking Group is the subject of the latest customer data leak in the banking sector, after it emerged details of some of its customers had gone missing and are thought to have been "stolen" by fraudsters.

The Daily Telegraph, which first broke the story, says the details relate to customers with a Lloyds Premier Banking account and who had an emergency home insurance policy with Royal Sun Alliance (RSA) between 2006 and 2012. The policies were offered as standard on the paid-for accounts, which charge £25 per month and include a range of features including home and travel insurance, breakdown cover and a planned overdraft.

Lloyds wrote to customers last week "to warn that they may be at risk of fraud, urging them to buy special insurance" to protect themselves if their details were used. But the information actually went missing as long ago as July, when a storage device was stolen from a data centre operated by RSA.

RSA apologised to customers and said it was offering "identity protection with Cifas for two years to provide reassurance". It added that it was working with regulators and police on a "full investigation".

Lloyds refused to confirm how many customers were affected, saying only that RSA provided insurance cover provider for only "a small number of Lloyds Premier Account holders". It added that affected customers can also call a helpline to discuss their concerns on 0800 316 8090.

The bank has made negative headlines for two other reasons over the past week: bondholders are fighting to prevent the bank from cancelling hundreds of millions of pounds' worth of high-interest bailout-era bonds, while a former employee sacked following investigations into benchmark rigging is taking the bank to an employment tribunal.

Its shares have slipped from earlier summer highs and the bank was trading at 76p on Thursday afternoon, down 0.8 per cent for the day.

But despite these issues, analysts continue to give the bank a strong rating and predict shares will soar in the coming months as it returns to regular dividends. Societe Generale has become the latest to affirm a "buy" rating for a stock many assert could yet top 100p.