08:54, June 06 335 0

2017-06-06 08:54:10
RBS shareholder group settles with bank over £12bn rights issue

The remainder of the 9,000 investors suing RBS over its £12bn rights issue have settled with the bank this morning.

Thanks to this last-minute development in negotiations, RBS former CEO Fred Goodwin is unlikely to face a court hearing.

A source close to the case said the group had agreed to the settlement because they were signatory to the RBOS action group, which was understood to have accepted the bank’s last-minute offer last month of 82p for every £1 invested.

There had been talk of the trial going ahead tomorrow after a source said the group had located the £7m in funding required to take the case to full trial, but that is now understood not to be the case.

Another source added that this group of shareholders, who had refused the 82p and were wanting to pursue the case, only represented around 20 per cent of the claim. It added that because it was signed up to the RBOS shareholder action group, it had directed decision-making to that board and that if it wanted to pursue the claim, it would need to form itself into a separate group and the claim would need to be refunded again.

A further source told The Lawyer: “I’m not sure where this £7m has come from – it’s not realistic. There has been no indication they had costs for the three phases that make up a multi-year trial.”

The development will put an end to the tense case that has seen a number of stop-starts as the bank sought to settle with the shareholders and avert the possibility of a public trial. Last month, the bank floated the 82p settlement offer to shareholders which was double the tender that saw it settle with claimants in December last year, in an attempt to draw to a close the tumultuous litigation that has arisen from the financial crash.

The investors claimed RBS misled them about the state of its finances when they subscribed to the bank’s 12bn rights issue at the height of the financial crisis of 2008 and have suffered losses as a result.

The 9,000-strong group have been represented by Signature Litigation. Herbert Smith Freehills (HSF) has acted for RBS, while Goodwin drafted in Clifford Chance partner Dorian Drew as his legal counsel in case he was called to the stand on 8 June.

RBS and HSF were contacted for comment.