Councils sue bank over £550m loans

Two councils in Yorkshire are suing Barclays over bank loans worth more than £500m they claim they were fraudulently sold.

Sheffield City Council and Leeds City Council are two of seven local authorities across the UK claiming the banking giant manipulated the interest rates on the products, known as lobo loans, according to the BBC.

Leeds City Council is the lead claimant in the group after taking lobo loans of more than £200m with Barclays

Between 2004 and 2010 the seven councils took out 49 Lender-Option Borrower-Option (lobo) loans with Barclays. The complex high-cost loans had variable interest rates that could be changed by the lender.

The councils want the High Court to allow them to exit the loan agreements without paying any financial penalties.

Pressure group Debt Resistance UK acquired the information via a freedom of information request and says the seven councils took out lobos worth £550m.

Barclays declined to comment.