Lloyds Banking Group is facing a legal attack over its calamitous takeover of HBOS in 2008. A class action lawsuit, bringing together more than 6,000 investors that owned shares
at the time, has been planned to force the company to release emails and other documents dating back to the deal, "to find out who knew what", according to an inside source cited by the Sunday Times. The claimants, including major UK pension funds and asset managers, believe they lost £400m through the acquisition as they were duped into approving the merger as crucial information about the health of HBOS was withheld to ensure the deal went ahead.
Fellow high street lender HSBC is expected to face a fiery shareholder rebellion this week, the Sunday Times reported, as the bank puts a £7.6m pay package for chief executive Stuart Gulliver in front of investors at the annual meeting on Friday. "I would imagine there will be fireworks," said Martin Gilbert, chief executive of Aberdeen Asset Management, whose fund owns 1.6% of the lender. He suggested investors would welcome any move to simplify the globe-spanning lender, with the board likely to be under pressure to speed its retreat from overseas markets.
This news may be drowned out by the wails around Tesco as the supermarket giant unveils an 'eye-watering' £4bn-£5bn loss on Wednesday, the biggest in its 96-year history as well as revealing that it will have to pump around £250m per year into its huge pension scheme. These payments are needed to plug a pension deficit that is forecast to have inflated to nearly £5bn, the Sunday papers all reported, citing the grocer's house brokers Deutsche Bank and Barclays. The company's interim results in October showed a deficit of £3.4bn after tax, but the latest triennial review of the scheme, which is expected to be revealed alongside Tesco's annual results, will show that the deficit has grown close to £5bn, requiring the board to commit additional hundreds of millions of pounds to the scheme every year in order to close the gap.
Further interest in City general meetings may come as the battle for Asia Resource Minerals, the company formerly known as Bumi, rumbles on, the Sunday Times said, ahead of the company's shareholder vote on Wednesday. A £98m bid from Indonesian conglomerate Sinar Mas could be launched on Monday that would threaten a rival proposal from deposed Bumi co-founder Nat Rothschild, on which investors are due to vote this week. The paper said Sinar Mas's 41p-a-share offer would be contingent on investors rejecting Rothschild's plans for a rescue rights issue.
What was predicted as a one-sided shareholder vote this week has been shaken up by the Scottish publisher of the Beano and Dandy cartoons, which has offered to stand up to Alliance Trust chief Katherine Garrett-Cox in her battle with aggressive American hedge fund Elliott Advisers, the Sunday Times said. DC Thomson, whose publications also include the free Shortlist magazine and numerous local Scottish papers, is Alliance Trust's third-biggest investor, and is, like the trust, also based in Dundee. Ahead of the annual meeting this week, Elliott has proposed installing three new non-executive directors, but Thomson said it was "satisfied" that the Alliance board was addressing the key issues of its concern.
Struggling oil explorer Afren is understood to be close to completing a $200m interim funding deal from its lenders, according to the Sunday Telegraph. The refinancing was agreed and announced last month, but has since been delayed, with strong opposition by many of the group's investors, who will face an 89% dilution if the deal goes ahead. The interim financing was due to be put in place ahead of a $300m recapitalisation that will give the lenders majority control of the company.
A less controversial deal has been struck by MoneySavingExpert, the consumer finance website set up by journalist Martin Lewis and now part of FTSE 250-listed Moneysupermarket.com. The Sunday Telegraph wrote that the group has bought into complaint resolution website Resolver.co.uk, which provides a free service that replaces the need for claims management companies. The company has taken a 24% stake for free as it looks to integrate Resolver into its website. Currently pre-revenue, Resolver is expected to eventually make money by selling data on consumer complaints to companies keen to improve their understanding of where their customer services are failing.
Metro Bank, one of several 'challenger' banks that are looking to shake up British high-street lending, has drawn up firm plans for a £1bn London stockmarket float in summer next year, according to the Sunday Telegraph. The move, just five years after Metro was formed, is part of American founder Vernon Hill's ambitious aim to mount a serious challenge to the long-standing dominance of the big four banks. Metro is understood to have be poised to begin lining up investment bankers to oversee the process in the third or fourth financial quarter this year.
A new challenger is also set for the high street. Former Asda chief executive Andy Bond is launching a new budget clothing chain with the backing of billionaire South African retail magnate Christo Wiese. The first branch of Pep & Co is currently being fitted out in Northampton, with a speedy roll-out of 50 shop openings this summer in secondary locations in the UK. The company, subject of the Sunday Times interview, "hopes to do for children and women's clothing what Aldi and Lidl have done for food". Wiese and the Pep management team, including ex-Sainsbury's Tu clothing executive Adrian Mountford, have together invested £20m into this first round of expansion, setting it up as rival to the popular Primark and Matalan chains, as well as the Asda George clothing label Bond ran for five year before becoming group chief. Pep, which will be oriented towards childrenswear, expects to hire 500 staff in the initial wave.
Slightly edgier fashion retailer New Look could be sold to Chinese investors, the Sunday Times said. The high street chain's private equity owners Apax and Permira have held talks with some of China's largest investors, with Club Med owner Fosun and private equity funds CDH and Citic Capital having all expressed an interest, accoding to City sources. The talks are at a preliminary stage, with a float seen as a back-up option.
Elsewhere in retail, the Mail on Sunday revealed two of those to be let go in the cull Morrison's announced last week. The grocer, which said it was to cut 720 head office jobs, has made fashion director Tim Bettley, the former Peacocks boss who set up Morrison's Nutmeg clothing label, redundant along with customer director Crawford Davidson, who launched the grocer's Match & More loyalty card last year.
Companies looking to expand in the capital are being forced to move out of the traditional business districts as London's office market boom hits heights not seen since before the financial crash. The amount of office space taken by companies over the last year jumped 42% to 8.2m sq ft, according to a study by the property and hotels firm, Cushman & Wakefield cited in the Sunday Telegraph. Areas such as Paddington, Kings Cross, Shoreditch and Fitzrovia are becoming more popular with businesses as, although London is cluttered with cranes, the majority of the development schemes are conversions from former-offices or industrial buildings into hotels and homes, as residential property commands a higher price per sq ft.
London's booming residential property market is the subject of a new investment for Sports Direct's entrepreneurial executive chairman Mike Ashley, who the Sunday Times reported has swooped onto a deal to build homes worth a total of £900m. A pair of Ashley's investment vehicles snapped up a storage depot in Chelsea from John Lewis for £200m, where there is planning permission for 62 flats and seven townhouses. The paper said it understood the money came from Ashley's personal company, MASH Holdings, having raised cash in a series of share sales in FTSE 100-listed Sports Direct that have cut stake in the retailer from 69% to 55% since 2013.
The rapid overseas expansion and modernisation of the once-dusty and staid Lloyd's of London, the world's oldest insurance market, is highlighted by the Sunday Times. Chief executive Inga Beale, who believes global expansion is the key to the 327-year-old market's future in the face of competition from hedge funds setting up their own reinsurance divisions and the number of Lloyd's syndicates having more than halved from above 200 in the last 25 years. Lloyd's has opened offices in China and Dubai in recent months and Beale hopes to open further offices in the Middle East, Latin America and Asia by 2025.