Newham Council has successfully secured a multimillion pound deal with Barclays Bank ending litigation over historic Lender Option Borrower Option (LOBO) loans.
Long-running litigation between the Council and Barclays Bank has been settled today with a deal that achieves substantial savings for Newham residents.
The Council took out ten LOBO loans with the bank, to the value of £238m, between 2007 and 2008. Those loans were converted to fixed rate loans in 2017. In June 2018, the Council issued proceedings in the High Court against the bank alleging fraudulent misrepresentation in relation to the loans and the subsequent LIBOR (London Inter-Bank Offered Rate) rigging scandal, first exposed in 2012. While the claim was struck out by the High Court in 2021, the Council secured permission to appeal that decision.
The multimillion pound deal struck with the bank allows the Council to reduce its interest payments substantially, freeing up much needed funds to invest in frontline public services and avoids continued lengthy legal proceedings.
The Mayor of Newham, Rokhsana Fiaz, said: “I made a promise to Newham residents in my 2018 election manifesto that I would clean up the Council’s budget. A key element of that was to address the scourge of risky LOBO loans taken out under the previous administration, which I had campaigned about.
“This is a great result for Newham residents and shows that we are an effective and decisive champion for their rights. We will always stand up and get the best deal for our residents. This is why the Council filed a High Court claim against Barclays Bank in 2018 and was prepared to pursue that case all the way if necessary.
“The deal is a successful resolution of the litigation for the Council and means that we can spend and invest very significant sums in services for Newham residents now and in the future.”