Size of RBS bill causing alarm

RBS could face a parliamentary inquiry into the spiralling legal costs of defending itself and disgraced former boss Fred Goodwin.

The case has been brought by shareholders of the Scottish banking giant, which has been accused of “bullying”.

Three members of the influential Treasury select committee have warned over political concerns about the lender’s legal costs.

These are set to hit £125million, including £6.5million that was spent on defending Mr Goodwin and three other former directors.

Labour MPs Rachel Reeves and Wes Streeting, and Conservative backbencher Jacob Rees-Mogg, are demanding RBS bosses justify the “fortune” spent on the case.

They also want chief executive Ross McEwan to explain comments

“Taxpayers are footing the £125m RBS legal bill”

made apparently criticising staff among those suing, and suggest a committee inquiry could be launched when the case is over.

Mr Streeting said: “RBS is waging a legal war against 27,000 small investors who have spent years trying to get justice. It’s both a grotesque waste of money and a bullying tactic. And it’s all the more concerning because taxpayers are footing the huge bill.”

The case, which comes to trial next month, is becoming one of the most costly civil defences in history as RBS fights claims by staff and shareholders over its £12billion cash-call during the financial crisis.

Shareholders allege RBS misled them about its health at the time of a 2008 rights issue, which happened shortly before it was bailed out with more than £45billion of taxpayer cash.