- Former head of the now-disbanded Financial Services Authority is due to give evidence in secret. Neither press nor public will be permitted to be present, following a court order. The court order itself was also unknown until Monday.
LONDON – Sir Hector Sants, the former chief of the now-defunct Financial Services Authority, is due to give evidence in secret as part of the trial about Lloyds Bank’s takeover of HBOS in 2008.
Sants is due to give evidence in December in a £550 million court case brought against the bank by 6,000 investors, according to a report in the Guardian.
The investors are suing Lloyds Banking Group and five former directors for the decision to acquire HBOS at the height of the financial crisis. Lloyds and the directors deny any wrongdoing.
On Monday it came to light that Sants’s evidence is due to be given in private, without the press or public present, after Mr Justice Nugee signed a court order permitting secrecy in July.
The court order itself has also been unknown until now, but Mr Justice Norris ruled on Monday that it could become public, following an application by five media organisations.
Sants will be cross examined in private, for insights into why Lloyds went ahead with the HBOS deal as the financial situation worsened in October 2008.
The trial so far has heard claims that by October 2008 Lloyds had been looking to reduce the price it paid for the HBOS deal, but had been told by Sants at the FSA that it would have to raise the £7 billion regardless of whether the deal went ahead. The shareholders bringing the case claim this capital requirement was a “naked attempt” by the FSA, the Bank of England and the Treasury to “bully” Lloyds into the deal.
Lloyds and the directors deny they were bullied into a deal, but defence documents say they were “shocked” at the FSA’s demand, and note Sants had said the £7 billion was “non-negotiable.”
Prior to the crisis the FSA had been criticised for being too lenient, prompting Sants to warn the financial services industry that it should be “very afraid” of the regulator.