Shareholders are gearing up for a long-awaited trial this week as they seek £600 million in damages from Lloyds Banking Group and five former executives over claims they were misled during the acquisition of HBOS.
Opening submissions are set to be given at the Royal Courts of Justice on Wednesday, marking the start of a 14-week trial brought by the Lloyds/HBOS Shareholder Action Group.
The group - which represents about 6,000 former Lloyds TSB shareholders - is seeking around £600 million in damages in the case against Lloyds Banking Group, former chairman Sir Victor Blank, ex-chief executive Eric Daniels, former chief financial officer Tim Tookey, one-time director of retail banking Helen Weir, and ex-director of wholesale banking George Truett Tate.
It is expected that each defendant will be cross-examined during the trial, which is expected to shed further light on the internal decisions that drove the bank's controversial acquisition of HBOS.
HBOS saddled Lloyds with lots of toxic assets stemming from risky bets made by HBOS on commercial property during the boom years.
Lloyds was later forced to take a Government bailout worth £20.3 billion, which has been blamed in part on the takeover.
A spokesman for the action group said: "We will finally have our day in court after nearly 10 years and expose the injustice done to Lloyds TSB shareholders who were duped into rescuing a defunct HBOS.
"The trial will show how much the director defendants knew about how bad HBOS was, that they concealed crucial information about HBOS's financial position, and that they should not have recommended the deal on the basis that they did, nor should they have allowed the deal to go ahead on those terms."
The spokesman said they hoped the trial would also "get to the bottom" of the role played by the UK Government, Bank of England, UK Listing Authority and the now-defunct Financial Services Authority (FSA) in "relaxing competition rules" and "pushing through the deal".
The claimants are comprised of around 300 institutional shareholders - including pension funds and investment funds from the UK, Europe, Asia, Canada and the US - and around 5,700 retail investors who say Lloyds TSB failed to disclose the true financial state of HBOS when it launched the acquisition.
A spokesman for Lloyds said: "The group's position remains that we do not consider there to be any merit to these claims and we will robustly contest this legal action."
The bank is also facing a backlash over its response and redress over the HBOS Reading scandal, which saw corrupt staff at the Berkshire branch embark on a £245 million loans scam between 2003 and 2007.
The scam destroyed several businesses as staff squandered the profits on high-end prostitutes and luxury holidays.
The spokesman for the Lloyds/HBOS Shareholder Action Group - which is being represented by Harcus Sinclair UK - said: "The fact that Lloyds Banking Group under the leadership of its current chief executive officer, Antonio Horta Osorio, is continuing to stand by and defend the actions of the director defendants is staggering, especially given the reputational damage done to the bank as a result of his slow response to providing redress to the victims of the HBOS Reading scandal."
Lloyds has put aside £100 million for victims of HBOS Reading, but is also being hit by claims from the likes of television celebrity Noel Edmonds, who is seeking £300 million in compensation over the scandal.