Rush to join multi-billion pound RBS legal actions

ANGRY shareholders in Royal Bank of Scotland have made a late rush to join legal actions over its controversial £12 billion rights issue in 2008.

Royal Bank of Scotland have been dealt legal actions over a £12 billion rights issue. Picture: JP

The deadline for suits related to the cash call on investors expires on Wednesday and one of the main action groups has seen a trebling of institutions seeking damages.

As a result, the claim led by British legal firm Stewarts Law is now expected to raise the sum being sought through the High Court from “hundreds of millions” to £1bn.

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The firm represented nearly 80 international investors and pension funds from Britain, Canada and the US at the beginning of the year. But sources say the number of institutions has jumped to more than 300 as the cut-off date has approached.

One source close to the legal action said: “There has been growing momentum.

“It has really gathered pace ahead of the deadline, and is a random mix of pension funds and asset managers. The Stewarts Law claim is now probably worth in excess of £1bn.

“It is probably because as time has progressed, institutions have decided they have a fiduciary duty to pursue an action. They would face strong criticism if they did not bring an action and there was a huge settlement in favour of the claimants.

“You could imagine them being asked why they did not participate. The only institutions now who have not joined one of the actions against RBS are those who sold out quite quickly after the rights issue and lost virtually no money.”

Shareholder action groups allege that the bank misled them as to its financial strength in the rights issue prospectus.

RBS vigorously contests the claims. Group chief executive Ross McEwan has said there will be no out-of-court settlements because it has a strong defence against the charges.

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.

The deadline for private investors to join a separate £4bn action by the RBoS Shareholders Action Group, representing 100 institutional investors and 12,000 small shareholders, expired last Friday after being extended from 30 April because of late demand.

A source close to the group said: “We have had a lot of private investors and institutions coming in since Friday’s extended deadline was announced. The applications have not all been processed yet, but by all accounts it is a substantial number.”

The RBS Rights Issue Action Group, represented by Leon Kaye Solicitors, issued court proceedings against taxpayer-backed RBS on 28 April on behalf of more than 3,500 private investors to a value of about £20 million.

A fourth claim is also understood to have been launched by international corporate litigation firm Quinn Emanuel, representing five blue-chip investors: Edinburgh-based Standard Life Investments, Legal & General Investments Management, Prudential, Aviva and the University Superannuation Fund.