The Press and Journal (Inverness, Highlands, and Islands)
Deal could cost bank ‘tens of millions’
Royal Bank of Scotland was last night close to settling a costly and potentially embarrassing case alleging it misled shareholders during a £12billion fundraising at the height of the financial crisis.
The state-owned British bank is in talks to settle with a group of investors to end legal proceedings that started five years ago and have been unprecedented in English legal history for their size and complexity.
Some large shareholders want to settle, meaning smaller retail investors would struggle to fund the legal fees needed for the case to proceed, sources involved in the group said.
RBS, and the RBoS shareholder action group which represents about 9,000 private investors, declined to comment.
The civil trial brought by the investors was due to open at the High Court in London yesterday but was adjourned for a day to allow for settlement talks.
The plaintiffs allege former executives, including disgraced chief Fred Goodwin, gave a misleading picture of the bank's financial health ahead of the cash call in 2008. Months later, RBS had to be rescued by the government with a £45.8billion bailout.
RBS, which remains more than 70% stateowned, denies any wrongdoing over the 2008 rights issue and says its former bosses did not act illegally.
Jonathan Nash, a lawyer representing the claimants, appealed in court for an adjournment, saying the two parties were in settlement talks and wanted longer to strike a deal.
The sources said RBS chief executive Ross McEwan was directly involved in talks over the weekend and that the bank had offered more than 80 pence for each RBS share held, though it was not clear if any investors have accepted the offer.
A settlement at that price would cost RBS “in the tens of millions of pounds", a third source familiar with the matter said.
The bank has settled with 87% of the investors who originally brought the case but the others have so far rejected its offers and say they were determined to go to court.
By doubling the amount on offer, RBS is close to a sum the remaining investors would accept, indicating that they might settle if RBS raises its offer to 100 pence per share.
That represents half of the 200 pence per share investors paid at the time of the rights issue.