A poll of aggrieved Royal Bank of Scotland shareholders is being conducted before this Thursday’s deadline to see whether there is a “convincing majority” in favour of accepting an out-of-court settlement of their £700 million legal action.
The judge, Justice Hildyard, adjourned the opening of the case on three consecutive days last week as lawyers for the RBoS Shareholders Action Group and the bank said they were close to reaching settlement on an improved compensation offer of 82p a share. That is more than double the offer already accepted by other shareholders representing 87 per cent of the original claims related to RBS’s £12 billion rights issue in 2008 – but well short of the 200p price in the investor cash call.
A total of 18 institutional investors and 9,000 private shareholders maintain RBS and its former leading directors, including chief executive Fred Goodwin, gave a false picture of the bank’s financial strength in the rights issue prospectus. RBS and the directors deny wrongdoing.
It is reported that a hard core of the action group are resisting the out-of-court settlement because they want to see Goodwin held to account over his stewardship of the bank that led to the disastrous acquisition of ABN Amro a year before the financial crash and RBS’s subsequent tumble into taxpayer ownership.
John Bradney, a 75-year-old retired chartered accountant who says he lost £10,000 in the affair when RBS’s shares lost 90 per cent of their value, said: “I very much hope the trial goes ahead. I don’t like losing money, but it is not going to make a change in lifestyle for me. The RBS directors were remunerated on such a scale that one would hope they took into account the complexity of the job they were to do.”
Bradney said he believed the cliffhanger of whether shareholders, led by law firm Signature Litigation, would accept the offer on the table from RBS indicated “the plaintiffs are not very well organised. Having had eight years to get ready they might have given some thought to the level they would settle at.”
Another source familiar with the action said: “There’s obviously an impediment to the settlement being agreed, even though it is said a majority of shareholders are in favour.
“Normally you would be able to do this within a day or two. It has been said there is a majority in favour of acceptance of the settlement. But one wonders what level of vote among the diehards who want the trial to take place would be necessary to veto a deal.”
It is understood there is no formal mechanism for deciding how many shareholders need to vote in favour of the settlement other than what one analyst called a “convincing majority”.