By Jonathan Davies

Thousands of Lloyds Bank's shareholders have launched a £350 million lawsuit against the bank over claims it failed to fully disclose the state of HBOS' finances during the takeover in 2008.

HBOS and Lloyds had already received a £17 billion bailout from the government when the takeover was completed. But with HBOS' finances in a worse state than expected, a further £5.7bn bailout was required.

Shareholders argue that the extent of HBOS' financial troubles were not disclosed in a document sent by Lloyds ahead of the takeover.

The investors claim they lost £1 per share as a direct result of the HBOS takeover. The lawsuit is being brought by 6,000 investors. They range from small investors to huge pension funds like the National Farmers' Union and Royal Borough of Kensington and Chelsea.

In a statement, Lloyds Bank said: “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."