Shareholder hopes rise for RBS legal action trial

Sir Fred Goodwin was chief when RBS made controversial �12bn rights issue. Picture: Ian Rutherford
Sir Fred Goodwin was chief when RBS made controversial �12bn rights issue. Picture: Ian Rutherford
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SHAREHOLDER action groups who have launched or are weighing up lawsuits against Royal Bank of Scotland over its £12 billion rights issue in 2008 believe they are close to a firm date for trial.

The groups, which allege they were misled by RBS as to its financial strength at the time, also expect a key High Court case management hearing to decide whether liability and damages in the case should be the subject of separate or single hearings.

That RBS case management hearing at the High Court in London in front of Mr Justice Hildyard has been scheduled for 22 and 23 May. One legal source told Scotland on Sunday: “This meeting is important because a trial date might well be set, although it is virtually impossible to know how far out that date will be. The judge may also decide how much time needs to be set aside for the case.

“Another important issue we hope will be resolved at the meeting is whether there should be a single eventual legal hearing to discuss liability and quantum [any damages to be awarded], or separate hearings for each issue.

“One advantage of deciding these issues separately is that if the shareholders lost the case on liability then what is the point of discussing the quantum at all. If the claimants win, however, it would open up the scenario of damages to be decided.”

Two legal actions have already been launched against RBS over the stock market cash call that followed its disastrous acquisition of Dutch bank ABN Amro and months before it crashed to record losses of £24bn in 2008.

A £4bn action by the RBoS Shareholders Action Group names four former Royal Bank of Scotland directors in proceedings: chief executive Fred Goodwin, chairman Sir Tom McKillop, investment banking head Johnny Cameron and finance director Guy Whittaker.

The action group, representing 100 institutional investors and 12,000 small shareholders, says its lawyers will contend that RBS is liable for the losses incurred on the shares subscribed for in the rights issue because of breaches of Section 90 of the Financial Services and Markets Act 2000.

The other legal claim launched is said to run to hundreds of millions of pounds, and is headed by law firm Stewarts Law, representing nearly 80 institutional investors.

RBS has said it will vigorously contest the allegation that the bank misled investors as to its financial strength. It is expected to cite the now-abolished financial regulator, the Financial Services Authority, which said that any bad decisions made by directors “were not the result of a lack of integrity by any individual”.

In 2012 US courts found in the bank’s favour regarding two legal actions related to the rights issue by holders of RBS preference shares and American depositary receipts.

A third action group, the RBS Rights Issue Action Group, representing 8,000 small shareholders in RBS, has said it is also close to issuing legal proceedings.