Day of reckoning is too late for many
Almost a decade after the Government bailed out Royal Bank of Scotland (RBS), investors who watched their shares collapse in value are now closer to finding out the truth behind the fiasco.
Monday marks the start of a 14-week, £700m trial brought against the lender by 9,000 retail investors and 18 institutions. They are represented by the RBS Shareholder Action Group, which has repeatedly rebuffed out-of-court settlements. The case centres on whether bosses knew of RBS’s fragile state before it raised £12bn from shareholders. Months later, RBS shares fell by 90 per cent; they were worth about 600p 10 years ago, but today they are valued at 264p.
Regardless of how the trial goes, for many claimants the day of reckoning has come too late. As reveals today (page 4), thousands of claimants have died in the nine years it has taken the case to come to trial. What is also controversial is how much RBS has forked out on legal fees. The bank, still 72 per cent owned by the taxpayer, has already spent £100m defending the case and has set aside provisions of £800m in total.
RBS has a team of lawyers, some of whom are reportedly on £1,000 per hour. Included in the legal expenses is £6.5m that was spent defending Fred Goodwin, the bank’s former chief executive, who was at the helm when RBS made a loss of £24.1bn, the biggest in UK corporate history.
When Mr Goodwin, who was stripped of his knighthood in 2012, appears at the High Court on 8 June, it will be the first time he has been forced to publicly account for his and the bank’s actions in 2008. Thousands of investors have been waiting for this day for years.