For Lloyds, the HBOS debacle escalated after it emerged that two former employees of the subsidiary face prosecution for a suspected cover up of fraud.
The SundayTimes reported the employees had allegedly tried to mask fraud at the HBOS Reading branch as the bank struggled financially, leading to a rescue takeover deal with Lloyds in October 2008.
Six people were jailed earlier this year over the case, which involved two former bankers at HBOS who siphoned off money from struggling businesses to fund lavish holidays.
Last month Lloyds said it had appointed professor Russel Griggs to conduct an independent review on compensation for victims of the HBOS scandal.
Lloyds said it has written to the majority of customers affected by the fraud since announcing a review in February.
Meanwhile, RBS faces a £125mln bill for legal costs as it defends itself against accusations of misleading investors over its financial position in the lead up to its 2008 rights issue, City Am reported today.
RBS is being sued by former shareholders affected by the £12bn fundraising, which preceded the bank’s £45bn government bailout during the financial crisis.
An interim ruling related to the case by Justice Hildyard showed the estimated legal costs so far exceed £100mln, comprising £6.5mln to defend four former RBS executives, including Fred Goodwin who was chief executive at the time of the rights issue.
The 73% state-owned lender will also have to fork out £25mln from the date of the settlement with other shareholders last December to the end of the first trial.
RBS has made a settlement offer of £800mln to all groups affected by the rights issue but has made no admission of liability.
Last December, the bank paid a 21p-per-share settlement to institutional investors represented by Stewarts Law and Quinn Emanuel Urquhart & Sullivan.
The RBoS Shareholder Action Group, which counts 27,000 former RBS shareholders among its members, is the last-remaining claimant seeking compensation for losing money after subscribing to new shares in the bank.
The bank’s lawyers have reportedly recommended a 43.5p-per-share settlement in the last fortnight to the Action Group.
However, it is understood the Action Group had rejected the settlement as many of its members want to see the case through to a trial that is due to begin in May.
Some of the group’s members are willing to settle but want 92p per share, Sky News reported last week.