Doubts are growing over the prospects of an out-of-court settlement between a shareholder action group and Royal Bank of Scotland over legal claims investors were misled in the bank’s £12 billion rights issue in 2008.
Talks between lawyers for the parties were understood to have taken place last weekend over compensation levels to stop a full-scale court action in London in May.
Ahead of the talks one source put the odds of a successful deal at “no better than 50-50”. But another person familiar with the situation indicated that the parties were as far apart on price as ever.
“People are getting over-excited,” the source said. “Currently, the RBS offer is worth about 41.5p a share to investors. That is unlikely to be acceptable to investors, and yet the bank is simply not moving on the issue.
“The legal advice the shareholders have received is that the claim value should be somewhere between 97p and 245p a share.”
RBoS Shareholder Action Group, including about 100 institutional investors and thousands of private investors, claims shareholders were misled on the financial strength of the bank at the time of the cash call. RBS vigorously contests this.
The cash call came after RBS’s £10bn acquisition of much of ABN Amro in the autumn of 2007. Late in 2008 RBS collapsed into majority taxpayer ownership with a record UK corporate loss of £24bn.
RBS’s shares were at 600p in early 2007. They closed last night at 238.2p.