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Blank defends HBOS due diligence

Lloyds Banking Group chairman Victor Blank has defended the bank’s level of due diligence carried out before it took over HBOS.

Blank, who was re-elected to the board today, told shareholders at their annual general meeting in Glasgow today that he was sorry for any loses incurred as a result of their Lloyds investment.

In January, shares in Lloyds Banking Group plummeted by more than a third after the merger with HBOS.

He said: “The board are sorry about the decline in our share price and the financial difficulty the temporary suspension of our dividend has caused shareholders.”

The chairman also defended the level of checks carried out before the government-brokered HBOS deal went ahead.

The Financial Times reports that one shareholder, Hansa Trust representative William Salomon, questioned Blank over the levels of due diligence carried before the HBOS deal was completed. He said: “You have talked about the consequences of what you found in the HBOS banking book, which I have to say in the City was widely known. I’m not sure how you do your due diligence but it was widely known that Bank of Scotland’s lending practices were very poor.”

Blank said: “Our due diligence was thorough. We were very aware when we were doing the due diligence that this was a higher risk portfolio.”

This statement contradicts evidence given by Lloyds chief executive Eric Daniels at a Treasury Select Committee in February. He told MPs the due diligence done on the HBOS had been severely lacking.

Blank faced angry criticism from several shareholder bodies for the HBOS deal, which left the group with more than £10bn of debt.

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