Lloyds Banking Group shareholders are claiming Lloyds TSB bosses knew HBOS was manipulating Libor rates when it recommended the takeover of the troubled bank.
According to the Scotsman, shareholder campaign group Lloyds Action Now has instructed lawyers to include the allegation in its claim against Lloyds.
The Scotsman says figures show that during the financial crisis, Royal Bank of Scotland and HBOS regularly submitted lower borrowing costs than banks with stronger balance sheets including Barclays, JPMorgan Chase and HSBC.
LAN chairman Andrew Watson told the Scotsman: “HBOS pretended that it was able to borrow money from other banks on an unsecured basis at rates more favourable than, for instance, HSBC Bank could.
“Lloyds TSB directors closed their eyes to this, did not disclose the true position and even hid the fact HBOS had received massive secret loans to keep it afloat in the run up to the takeover.”
A Lloyds spokesman says: “As with many others in the sector, the group is assisting various regulators in their ongoing investigations into the setting of Libor. Until these investigations are completed, it would be inappropriate for us to comment any further.”