Around 6,000 claimants argue that the Lloyds directors failed to disclose the perilous state of HBOS’s finances when it recommended the acquisition of the banking company in a circular sent out to shareholders in November 2008.
The shareholders – known as the Lloyds/HBOS Shareholder Action – claim they were kept in the dark about the £25bn ($39bn, €35bn) liquidity support which HBOS had been granted by the Bank of England, as well as the $18bn from the Federal Reserve.
They also claim Lloyds TSB had secretly made a £10bn loan facility available to HBOS.
According to claimants, the acquisition of HBOS resulted in the share capital of the Lloyds TSB shareholders being disproportionately diluted.
"The group’s position remains that we do not consider there to be any legal basis to these claims and we will robustly contest this legal action"
The first hearing took place at the Royal Courts of Justice in London on Wednesday.
During the hearing, claimants asked the judge to impose a timetable for the disclosure of documents, including communications between the directors and HM Treasury, the Bank of England, the Federal Reserve and FSA officials.
More than 300 claimants are corporate entities including, pension funds and other large investment funds registered in countries around the world. The remaining 5,700 are private shareholders.
Lloyds, however, disputes the claims. “The group’s position remains that we do not consider there to be any legal basis to these claims and we will robustly contest this legal action,” a spokesperson from the group said in a statement.
The claimants are being represented by law firm Harcus Sinclair UK, which specialises in representing large numbers of individuals and corporate clients who share the same essential complaint.