Their claim names Lloyds' former chairman Victor Blank, former chief executive Eric Daniels, ex-finance boss Timothy Tookey, ex-retail banking head Helen Weir and former wholesale banking boss George Truett Tate, and is the second U.S.-style class action alleging bank misdeeds during the credit crisis.

Thousands of investors are also suing Royal Bank of Scotland, claiming damages of around 4 billion pounds and alleging they were misled about the financial position of the former banking heavyweight during an emergency cash call at the height of the 2008 credit crisis.

London's High Court on Tuesday made a Group Litigation Order -- designed to manage a large group of claimants -- and lawyers representing the Lloyds shareholders past and present urged others to register claims by Nov. 10 to avoid losing their right to compensation.

Under English law, such claims have to be launched six years from the date at which the alleged wrongdoing took place or was spotted. A campaign to draw attention to the cause, which will include newspaper advertisements, is due to begin on Wednesday.

The Lloyds Shareholder Action Group, led by law firm Harcus Sinclair's litigation head Damon Parker, alleges Lloyds's former bosses breached fiduciary and other duties to win the backing of investors for a government-arranged purchase of HBOS and misled shareholders about its true financial position.

Lloyds, which subsequently had to be bailed out with 20.5 billion pounds of taxpayer money and remains 25 percent state owned, dismissed the allegations and vowed to defend itself.

"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," it said in an emailed statement.

"EFFECTIVELY WORTHLESS"

When recommending the HBOS purchase to shareholders, Lloyds bosses valued Britain's biggest mortgage lender at around 5.9 billion pounds. However, the business was "effectively worthless", the Lloyds Shareholder Action Group alleges.

HBOS, formed out of the 2001 merger of former English building society Halifax and the 300-year-old Bank of Scotland, was supposed become a new force in banking.

But it ramped up lending using cheap funding on the wholesale markets rather than safer customer deposits, and its high-risk strategy was exposed when that funding dried up following the collapse of Wall Street's Lehman Brothers in 2008. A subsequent parliamentary report in 2013 blamed its failure on over-expansion, poor risk controls and complacent management.

"Many Lloyds TSB shareholders understandably feel that they were made to pay to save HBOS for the good of the country as a whole. To them, HBOS was an impulse buy on the part of Lloyds’ directors that wiped out the benefit of years of prudent management," Harcus Sinclair's Parker said.

Investors allege they were not told HBOS was receiving emergency support from the Bank of England and U.S. Federal Reserve, which peaked at around 25.4 billion pounds and $18 billion respectively. They also allege Lloyds secretly loaned HBOS 10 billion pounds around Sept. 16, 2008 to allow it to continue trading.

The value of their actual claim will depend on how many join the new action group. A small group of around 200 private former and current investors, which owns around two million shares, have brought the claim.

However, the Lloyds Action Group is hoping to attract some of the 800,000 private shareholders and 1,000 institutions invested in Lloyds at the time.

(Editing by Mark Potter)

By Kirstin Ridley