RBS agrees £800m payout over 2008 rights issue lawsuit

The Edinburgh-based bank, which is still 73 per cent state-owned eight years later, said it had reached agreement with three out of five groups which brought the claims, worth about £4bn.

The groups represent 77 per cent of the claims by value and the bank said it would aim to reach a deal with the remaining two. In total, it has set aside £800m to settle the claims.

The bank had gone to shareholders looking for an injection of £12bn as the financial crisis loomed.

RBS chief executive Ross McEwan has been battling these so-called legacy issues since taking the helm at the lender in October 2013.

The bank is also facing a penalty of up to £8 billion from the US authorities over the way it sold mortgage bonds a decade ago.

The bank, which is not admitting liability, last week failed its annual health check from the Bank of England. Uncertainty about such matters is one reason the bank struggled in last week’s stress tests.

A statement from the bank said: “In order to minimise further material litigation expense and management distraction and without any admission of liability, RBS has concluded a full and final settlement with three out of the five shareholder groups representing 77 per cent of the claims by value in the 2008 Shareholder Rights Issue litigation.

In total, RBS is willing to make available settlement sums of up to £800 million assuming settlement of all claims, to be split among all five shareholder groups, subject to agreement and claim validation. RBS will now seek to agree finalised terms with members of the remaining two groups whose claims are presently continuing. Any claims for which settlement is not achieved will, however, continue to be vigorously defended. The trial for such claims is due to commence in March 2017.

Mr McEwan said: “We have been very clear that we wanted to deal with as many of our legacy litigation issues as possible during 2015 and 2016. We are pleased to have reached this agreement and hope that it will be accepted by the remaining claimant groups so that this long course of complex and costly litigation can now be concluded.”

Two groups of shareholders, representing the likes of Société Générale, Abbey Life, Aberdeen Asset Management and Axa as well as local authorities, retail investors and RBS staff, have not agreed to the deal.