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* Current, former shareholders to sue over purchase of HBOS
* Allege breach of fiduciary and other duties by ex-bosses
* Lloyds says will robustly contest allegations
By Kirstin Ridley
LONDON, Sept 30 (Reuters) - Investors are joining forces tosue Britain's biggest retail bank Lloyds and fiveformer executives, alleging they were misled over an ill-fateddeal in 2008 they say wiped about 6 billion pounds ($10 billion)off the total value of shares.
Their claim names Lloyds' former chairman Victor Blank,former chief executive Eric Daniels, ex-finance boss TimothyTookey, ex-retail banking head Helen Weir and former wholesalebanking boss George Truett Tate, and is the second U.S.-styleclass action alleging bank misdeeds during the credit crisis.
Thousands of investors are also suing Royal Bank of Scotland, claiming damages of around 4 billion pounds andalleging they were misled about the financial position of theformer banking heavyweight during an emergency cash call at theheight of the 2008 credit crisis.
London's High Court on Tuesday made a Group Litigation Order-- designed to manage a large group of claimants -- and lawyersrepresenting the Lloyds shareholders past and present urgedothers to register claims by Nov. 10 to avoid losing their rightto compensation.
Under English law, such claims have to be launched six yearsfrom the date at which the alleged wrongdoing took place or wasspotted. A campaign to draw attention to the cause, which willinclude newspaper advertisements, is due to begin on Wednesday.
The Lloyds Shareholder Action Group, led by law firm HarcusSinclair's litigation head Damon Parker, alleges Lloyds's former bosses breached fiduciary and other duties to win the backingof investors for a government-arranged purchase of HBOS andmisled shareholders about its true financial position.
Lloyds, which subsequently had to be bailed out with 20.5billion pounds of taxpayer money and remains 25 percent stateowned, dismissed the allegations and vowed to defend itself.
"The group's position remains that we do not consider thereto be any legal basis to these claims and we will robustlycontest this legal action," it said in an emailed statement.
"EFFECTIVELY WORTHLESS"
When recommending the HBOS purchase to shareholders, Lloydsbosses valued Britain's biggest mortgage lender at around 5.9billion pounds. However, the business was "effectivelyworthless", the Lloyds Shareholder Action Group alleges.
HBOS, formed out of the 2001 merger of former Englishbuilding society Halifax and the 300-year-old Bank of Scotland, was supposed become a new force in banking.
But it ramped up lending using cheap funding on thewholesale markets rather than safer customer deposits, and itshigh-risk strategy was exposed when that funding dried upfollowing the collapse of Wall Street's Lehman Brothers in 2008.A subsequent parliamentary report in 2013 blamed its failure onover-expansion, poor risk controls and complacent management.
"Many Lloyds TSB shareholders understandably feel that theywere made to pay to save HBOS for the good of the country as awhole. To them, HBOS was an impulse buy on the part of Lloyds'directors that wiped out the benefit of years of prudentmanagement," Harcus Sinclair's Parker said.
Investors allege they were not told HBOS was receivingemergency support from the Bank of England and U.S. FederalReserve, which peaked at around 25.4 billion pounds and $18billion respectively. They also allege Lloyds secretly loanedHBOS 10 billion pounds around Sept. 16, 2008 to allow it tocontinue trading.
The value of their actual claim will depend on how many jointhe new action group. A small group of around 200 private formerand current investors, which owns around two million shares,have brought the claim.
However, the Lloyds Action Group is hoping to attract someof the 800,000 private shareholders and 1,000 institutionsinvested in Lloyds at the time.
(1 US dollar = 0.6149 British pound) (Editing by Mark Potter)
