‘Never held to account’: The out-of-pocket shareholders and small firms who lost out

LOSER: INVESTORS

AMONG the biggest losers from the near-collapse of RBS were thousands of private investors who claimed they were duped into buying more shares in the lender as it teetered on the brink of the abyss.

They took the bank to court amid accusations that in 2008 Fred Goodwin and fellow bank bosses hoodwinked shareholders into investing in a £12billion ‘rights issue’.

The 9,000 claimants launched a £200million lawsuit after being encouraged to buy shares at £2 only to see their value plummet to 11p after the bailout.

They were offered 82p a share in compensation, but were not paid until last year. Goodwin and his coaccused denied misleading shareholders over the rights issue.

But the settlement meant he avoided being cross-examined in a courtroom. Indeed, apart from an enforced appearance before MPs, Goodwin was never publicly held to account.

Among the rights issue claimants was John Greenwood, a retired civil engineer from Huddersfield.

He lost more than £300,000 when RBS keeled over, including half his pension, plus £45,000 worth of shares he purchased after being impressed by the rosy picture painted in the rights issue prospectus.

‘It’s been a whitewash,’ he told the Daily Mail in 2017.

Claimant Peter Hoare, who had worked for NatWest for 35 years, attended a lunch for the bank’s pensioners in 2008 where Goodwin urged the guests to invest all of the savings at their disposal in the rights issue.

‘He was very charismatic and persuasive,’ Hoare, from Ware, Hertfordshire, recalled in 2017.

He bought more shares but a few months after the lunch RBS posted a record British corporate loss of £24billion and his investment was virtually worthless. ‘I would rather have seen Goodwin held to account in court, having to answer some difficult questions,’ he added.

It was not only small shareholders who lost out. Up to 12,000 small businesses were subjected to ‘widespread inappropriate treatment’ at the hands of RBS’s Global Restructuring Group (GRG) between 2008 and 2013.

But in 2018 the Financial Conduct Authority, the City watchdog, ruled it could take no disciplinary against RBS because it said it lacked the powers to discipline it for misconduct.

Andrew Bailey, the Bank of England governor who was the FCA’s boss at the time, said he appreciated that many GRG customers would be ‘frustrated’ by its decision.

‘The fact that we can’t take action in no way condones the behaviour of RBS,’ he added.

‘We expect high standards from the firms we regulate and RBS fell well short in its treatment of GRG customers.’