|Lloyds TSB says it will vigorously defend a money-laundering lawsuit brought by US prosecutors.
Lloyds and Bank of Cyprus face civil charges alleging they helped launder hundreds of millions of dollars from a securities fraud.
The US government is seeking penalties of at least $162m from Bank of Cyprus and $130m from Lloyds, which said the legal action was without basis.
Bank of Cyprus also denied the charges and said the case was without merit.
"We intend to defend the action vigorously and are confident the bank's stance will be vindicated," Lloyds said in a statement.
Prosecutors said that the banks allowed Lycourgos Kyprianou, former chairman of software firm AremisSoft Corp, to launder money from a securities fraud.
AremisSoft filed for bankruptcy amid allegations of insider trading made by US authorities.
Mr Kyprianou and others were indicted on securities fraud, money laundering and conspiracy charges in 2002.
Lloyds shares were down 2.3% at 535 pence in late morning trade.