Lloyds Banking Group PLC (LON:LLO) shareholders have lost a £385mln legal action over the purchase of rival HBOS in 2009.
The High Court of Justice rejected the injunction, which claimed shareholders were misled by Lloyds’ directors who recommended the deal without revealing key information about the parlous state of HBOS.
At the height of the financial crisis, the bank was forced to accept a £20bn bailout from the government, which retained a stake until 2017.
“Our clients are deeply disappointed by today’s judgment,” Damon Parker, founder and partner of law firm Harcus Parker, who represents 300 institutions as well as individual shareholders in the case, told the BBC.
“They wish to assess their options and will be considering whether to appeal,” he added.
Some 5,800 shareholders brought the action against Lloyds and five former directors including the then chairman Sir Victor Blank.
Lloyds shares were up 1% to 59.3p on Friday afternoon.