Royal Bank of Scotland faces the start of a High Court battle today with shareholders who allege they were misled into taking part in the bank’s £12 billion rights issue in 2008 shortly before its near-collapse.
A judge will hold the first administrative hearing of two lawsuits, which might lead to the bank paying out billions in compensation to the investors.
The two cases both argue that RBS misled investors by not disclosing the true state of its deteriorating financial position in the prospectus for the rights issue, which came after the bank’s disastrous purchase of ABN Amro bank the year before. If the allegation, which RBS vigorously denies, is ruled true, then it breaches the Financial Services and Markets Act 2000.
Law firm Bird & Bird is acting on behalf of the RBoS Shareholders Action Group, which represents up to 12,000 private investors and close to 100 institutional investors in a claim said to run to up to £4bn.
The second case is worth £360 million and brought by lawyers at Stewarts Law on behalf of a group of institutions managing retirement funds in Britain, the US and Canada.
• The action comes after an appeal that RBS mis-sold interest rate swaps to the directors of a small to medium-sized business was dismissed.
Jon Green, of law firm Clarke Willmott and who acted for the appellants John Green and Paul Rowley, said he was “very disappointed by the outcome” after the court threw out an appeal against a judgment made in favour of the bank in December.