The Merger Action Group, led by Scottish businessmen and backed by such people as Sean Connery, today begins proceedings that it hopes will prove that the merger of HBOS and Lloyds TSB is unfair.
The merger was announced September 17, and did not go through the Competition Commission after the Government bypassed the law. A previous attempt at a bank merger by Lloyds TSB was blocked in 2001, when the Competition Commission deemed it illegal for the bank to merge with the then Abbey National bank.
Last month more than 95 per cent of the Lloyds TSB shareholders gave the green light for the deal, which will see the two banks become the Lloyds Banking Group. HBOS shareholders will vote on Friday, but the MAG hopes its challenge will come to fruition before then.
This is not the first attempt to blockade the merger; last month two Scottish bankers attempted to derail the merger with a plea to keep HBOS independent under their helm. That failed after the Government hinted that an independent HBOS would not receive any of the bailout package.
HBOS has two million small shareholders, but less than 1000 institutional shareholders.
The MAG says the decision by Business Secretary Peter Mandelson to waive through the bid was “unlawful”. It is using a Scheme of Arrangement to counter the merger today, which will need 75 per cent of the shareholders’ backing.
Yesterday, SMPs Margo MacDonald and Alex Neill accused Mandelson of bulling MAG after the Cabinet minister said MAG’s members could be sued for legal costs if they did not drop their case.