RBS shareholders urged to settle share sale legal dispute

Former RBS boss Fred Goodwin may be spared having to defend his role in the lender's near-collapse after investors were urged to settle their legal case against the bank.

Monday, 29th May 2017, 11:54 pm
Updated Sunday, 4th June 2017, 9:50 pm
Fred Goodwin oversaw a rights issue in April 2008 when RBS asked shareholders to pump £12 bn into the bank. Picture: PA

Thousands of private investors have been involved in a long-running battle with RBS claiming they were misled by the bank and its former chief executive into pumping money into the failed lender before it was bailed out by the taxpayer at the peak of the financial crisis.

A court case was due to start last Monday at London’s High Court where Goodwin and a raft of former executives were on course for a public grilling as part of a £700 million lawsuit brought against the lender by 9,000 retail investors and 18 institutions in the RBS Shareholder Action Group.

But the case was adjourned until 7 June after RBS made a last minute offer to shareholders.

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Now an action group representing the investors is urging them to accept the 82p-a-share offer presented to them by RBS.

If the offer is accepted, the trial, which was expected to last for 14 weeks, will not go ahead.

A letter sent to members of the RBS Shareholder Action Group states: “Having carefully considered the merits of the current offer... we have decided to accept the offer of 82p per share on behalf of our membership. This is a decision which is fully supported by our legal advisers.

“We understand that accepting an offer of slightly below the previously advised range of damages, being 92p per share and 234p per share, may be surprising to some claimants. However, there are a number of practical and legal risks which had to be considered.”

The letter adds that while “the merits of the case against the bank remain strong, the merits against the individual director defendants has always been more mixed”.

It also adds that, even if shareholders won the case, RBS would likely appeal the claim as it relates to “a previously untested piece of legislation”, while another trial to assess the level of damages would also need to take place.

The offer must be accepted by 70 per cent of shareholders if the deal is to go through.

Disgraced former chief executive Goodwin - who was stripped of his knighthood following the bank’s near-collapse - was due to answer questions over the events leading up to the government’s £45.5 billion bailout nine years ago.

The legal action centres on a rights issue overseen by Goodwin in April 2008 when RBS asked existing shareholders to pump £12bn into the bank after leading a consortium that spent £49bn on Dutch lender ABN Amro.

Shareholders claim they were left nursing hefty losses following the cash call after RBS shares plunged 90 per cent and the government was forced to step in when the deal turned toxic.

Judge Justice Hildyard gave the go-ahead for the adjournment last week on the basis that the parties agreed there should be a delay for talks and the assurance given that there was a prospect that the “matter can be brought to a conclusion”. He added: “Obviously I would wish to facilitate that result.”