Comment & Analysis

LONDON (ShareCast) - Lloyds Banking Group (LSE: LLOY.L - news) chairman Sir Victor Blank survived a re-election vote at the troubled bank's AGM despite a grovelling apology for cutting the dividend after its takeover of HBOS.

"The board are sorry about the decline in our share price and the financial difficulty the temporary suspension of our dividend has caused shareholders," Sir Victor, who is standing down next year anyway, told shareholders at the AGM.

Sir Victor's comments came amid fierce criticisms of the level of due diligence carried out by Lloyds ahead of the acquisition of HBOS.

"Our due diligence was thorough," he told the meeting. "We were very aware when we were doing the due diligence that this was a higher risk portfolio," he said.

Sir Victor added that Lloyds had spent the equivalent of 5,100 man days on assessing the loans at HBOS and how they would perform in a worst case scenario.

Chief executive Eric Daniels added that Lloyds was making significant progress in achieving the £1.5bn it had identified from the HBOS deal.

The comments came amid a growing threat of legal action from small shareholder groups.

The UK Shareholders' Association has revealed it is taking legal advice over the HBOS deal and has drawn up a mailing list of 1.5m small investors.

Another lobby group, Lloyds Action Now, launched just ahead of the meeting. It has formed to explore grounds for legal action against the directors of Lloyds, HBOS and their advisers.

"Lloyds TSB shareholders are rightly furious at the way their company has been mismanaged by the board and the failure of professional advisors to discover the true state of the HBOS accounts at a time when its exposure to mortgage debt was a matter of public knowledge," it said.