Taxpayers face £100m legal bill for ex-RBS bosses
This article contains affiliate links. We may earn a small commission on items purchased through this article, but that does not affect our editorial judgement.
Taxpayers will ultimately foot much of the bill for defending the Edinburgh-based bank because it is 73 per cent owned by the UK government.
Investors allege they were misled about RBS’s underlying financial strength when they backed its £12bn rights issue in the spring of 2008, just months before the lender almost collapsed.
Advertisement
Hide AdAdvertisement
Hide AdThe rights issue came after what is now widely seen as a disastrous takeover by RBS of Dutch bank ABN Amro – while Goodwin was chief executive. Investors who bought shares in 2008 to help stabilise the bank’s finances saw about 90 per cent wiped from the share price within months.
The case, scheduled to begin in March, is expected to see former chief executive Fred Goodwin and ex-chairman Sir Tom McKillop called as witnesses.
A spokesman for RBS said: “We continue to strongly contest these claims.”
Documents from RBS’s solicitors, Herbert Smith Freehills, show the bank has so far racked up £86.2 million in legal costs. Including VAT, that figure rises to about £103m.
The revelation comes after the state-backed bank agreed to pay $1.1bn (£845m) to settle two lawsuits in the US over the sale of toxic residential mortgage-backed securities.
RBS faces a number of other civil lawsuits and criminal investigations in the US surrounding the sale of the securities, and warned it may have to set aside yet more money in response.