Government department to join legal fight over 2008 RBS share issue

Reuters has reported the move by the Ministry of Justice move ahead of May’s trial, at which disgraced former RBS chief executive Fred Goodwin is due to testify.

The civil lawsuit is being brought by RBS investors, including former and current employees and around 100 institutions, who bought shares during a £12 billion rights issue.

They allege RBS and four of its former directors concealed the extent of its financial woes prior to its recordbreaking bailout.

RBS has had to disclose more than 25 million pieces of information, including private emails and other messages sent by senior executives, to lawyers who allege RBS management at the time deliberately hid evidence of its deteriorating health before shareholders, who subsequently lost 80 per cent of their investment, were tapped for cash.

According to a document seen by the news agency, the Accountant General of the Senior Court has applied to join the RBoS Shareholder Action Group to represent those such as children and the estates of people who have died and might not otherwise be able to pursue claims.

Sources familiar with the case are quoted by Reuters but the Ministry of Justice has itself declined to comment officially on the application, which follows a similar move in February by senior businessmen including former RBS vice-chairman Angus Grossart.

RBS said it believes the bank, Goodwin and three other former executives named as defendants, have a strong case.

Claimants in cases such as the one being brought against RBS are typically restricted by a time limit of six years from the date when they could reasonably have found out about the offence, lawyers said, raising the question of whether new joiners to the suit will be allowed.

“We consider all new claims issued to be time barred and we will vigorously defend the claims on that basis,” an RBS spokeswoman told Reuters when asked about the application.

The case has already led to out-of-court settlements by RBS totalling hundreds of millions of pounds, with four of five groups originally suing the bank.

RBS raised its settlement offer to the RBoS Shareholder Action Group, which includes institutions such as Bank of America Merrill Lynch, Axa and Aberdeen Asset Management, as well as businessman Trevor Hemmings, by 2 pence to 43.5 pence per share in March.

Last week it was revealed that the UK government is now gearing up to finally sell its 73 per cent stake in RBS for a considerable loss.