Goldman Sachs apparently failed to declare a potential conflict of interest which resulted in pushing up the cost of a £23.5billion bail-out of Lloyds Banking Group, City sources claimed last night.
The allegation that the Wall Street bank may have put its own interests ahead of its British clients comes just a week after it was accused of fraud in the U.S.
Earlier this week the bank, already notorious for its huge staff bonuses, revealed a £3.6billion pay and bonus pool for its bankers for three months' work.
Yesterday it emerged that Goldman acted on two sides of the £23.5billion fund-raising deal to put Lloyds on a sounder financial footing last autumn. The bank apparently did not know this.
Goldman was helping Lloyds raise fresh funds from shareholders including the government, which owns 41 per cent.
At the same time, it apparently used its influence to persuade the bank to pay extra cash to investors holding its debt.
Goldman itself had purchased a large chunk of the debt so was in prime position-to line its own pockets.
The claim will increase the pressure on the Financial Services Authority to take action against the U.S. investment bank.
Goldman Sachs insisted last night: 'There was no conflict of interest. Our position has been seriously misrepresented.'
Lloyds Banking Group denied it was bullied into changes, saying: 'Terms and pricing are always subject to review until an announcement is made.
'The final decision on the terms and pricing of this offer was made by the Group following the recommendation of the syndicate, and not any one individual bank.'
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