The Press and Journal (Inverness, Highlands, and Islands)
Ex-bank boss faces grilling RBS braced for costly legal battle with shareholders as trial begins
Royal Bank of Scotland is bracing for a costly court battle with shareholders that is to see former boss Fred Goodwin defend his role in the lender’s near collapse during the financial crisis.
Mr Goodwin and a raft of former executives are in line for a public grilling as part of a £700million lawsuit brought against the lender by 9,000 retail investors and 18 institutions in the RBS Shareholder Action Group.
While settling the lion’s share of the claims out of court, RBS is now heading for a 14-week trial, which begins today.
The disgraced former chief executive, who was stripped of his knighthood following the bank’s near collapse, will answer questions over the events leading up to the government’s £45.5billion bailout nine years ago.
The legal action centres on a rights issue overseen by Mr Goodwin in April 2008 when RBS asked existing shareholders to pump £12billion into the bank after leading a consortium that spent £49billion on Dutch bank ABN Amro.
Shareholders claim they were left nursing hefty losses following the cash call after RBS shares plunged 90% and the government was forced to step in when the deal turned toxic.
Despite the bank making significant headway in resolving the dispute, it has been unable to strike a deal with the last tranche of shareholders, with any chance of a last-ditch settlement proving a distant hope.
The bank has already settled with investors representing 87% of the claims by value, although it has not admitted liability, leaving 13% unresolved.
While the court case will begin today former RBS chairman Sir Tom McKillop will not appear until June 7, with ex-finance chief Guy Whittaker giving evidence on June 13 and former head of RBS investment bank Johnny Cameron on June 30.
Mr Goodwin will be cross-examined on June 8, the day of the general election.
The bank is legally obliged to provide lawyers for the former directors, but the lender’s legal costs have drawn sharp criticism, as the bill escalates towards £125million, including £6.5million defending Mr Goodwin and the ex-RBS bosses.
Three members of the influential Treasury Select Committee warned in April that RBS could face a parliamentary inquiry into the spiralling legal costs, which will make it one of the most costly civil defences in British history.
Labour MP Rachel Reeves said last month: “If RBS loses this case, the bank will have a lot of explaining to do to staff, shareholders and the public on why it spent a fortune on this case.”