Royal Bank of Scotland has stepped up efforts this weekend to reach an out-of-court settlement with thousands of former investors who claim they were misled in the bank’s £12 billion cash call in 2008.
It is understood the bank’s lawyers have resumed negotiations with the RBoS Shareholder Action Group to try and resolve the final shareholder claim related to the rights issue that they claim misled them as to the financial strength of the bank.
One source told Sky News that talks had accelerated this weekend ahead of the legal action against RBS expected to start in May, but said the odds of a successful resolution before a trial were “no better than 50-50”.
RBS yesterday declined to comment on the reports of the latest talks between it and the action group, which originally launched a £4bn legal action against the bank on behalf of 100 institutional investors and 12,000 small investors with holdings in the bank above £5,000 following the cash call.
But the bank said in a statement: “RBS has set aside £800 million assuming settlement of all claims in its 2008 rights issue litigation, to be split among all five shareholder groups.
“The bank has reached terms with four of these groups – representing almost 80 per cent of the value of the claim – and agreed a full and final settlement without any admission of liability.”
Four former RBS directors are named in the legal action: chief executive Fred Goodwin, chairman Sir Tom McKillop, Guy Whittaker, group FD, and investment banking head Johnny Cameron.
The development comes just days after the judge overseeing the case ordered the remaining claimant group to disclose further details of its funding amid concerns that it would be unable to cover legal expenses if it loses.
RBS launched the cash call in the spring of 2008 just months after Goodwin claimed the bank did not need any more money following its ill-starred acquisition of Dutch bank ABN Amro in 2007 against a backdrop of wholesale banking markets freezing up.
Later in 2008, RBS collapsed into majority taxpayer ownership with a record British corporate loss of £24bn. The government still sits on a majority 72 per cent stake in the bank, with many thinking the taxpayer will never get its money back.
RBS’s current management has said that if the case comes to court it will vigorously contest that it misled shareholders on the rights issue or acted illegally.
Explaining why it was pressing ahead with preparation for a full trial last December, the RBoS Shareholder Action Group said: “We had no option but to reject this inadequate offer and remain committed to seeking justice for our members through the courts.”
Institutional investors participating in the RBoS Shareholder Action Group action, being handled by the legal firm Signiture Litigation, include Aberdeen Asset Management and AXA.