RBS braced for fresh trial after investors raise legal fees

FT, 06.06.17

 

Royal Bank of Scotland and former disgraced boss Fred Goodwin are bracing for a trial over the state-backed bank’s 2008 share sale after investors managed to gather millions of pounds at the 11th-hour in an attempt to push ahead with the court case.

 

The RBS Shareholders Action Group, which represents thousands of individual investors, secured a £2m deal with high net worth funders on Monday night, taking their total funding pot to about £7m to cover the cost of the trial, according to shareholder Neil Mitchell.

 

Mr Mitchell said that the claim is “now fully funded” and that “claimants are willing to proceed to trial”, which is set to begin on Wednesday.

 

The development is the latest twist in the case which last week saw shareholders come close to a settlement with RBS at 82p per share, double the bank’s original offer. The case has been adjourned three times in as many weeks as a result of the ongoing talks.

 

But the bank and investors were locked in stalemate at the end of last week after a meeting was held with RBS chief executive Ross McEwan and no conclusion was reached, according to people briefed on the issue. RBS refused to raise its offer from 82p, one banker said.

 

The claim has been brought by RBS shareholders who allege they lost nearly all of their investment in a £12bn rescue funding launched by the lender in June 2008 — only months before it received the biggest bank bailout in UK history.

 

RBS has settled with other groups representing various shareholders, offering a total pot of £900m.

 

A number of investors recently told the Financial Times they were unwilling to settle because they wanted to see Mr Goodwin, who was stripped of his knighthood in 2012, held to account and for the “truth” to emerge.

 

Mr Goodwin has rarely been seen in public since RBS’s near collapse and agreed to reduce a £700,000 annual pension only following a very public battle. He still lives in Edinburgh.

 

RBS declined to comment.