RBS lawyers move to settle £4bn rights issue case

The still 73 per cent state-owned bank, which despite being perpetually besieged by a series of scandals since its £45 billion taxpayer bailout in 2008, is still facing at least five separate claims from different sets of investors who allege that they were misled into buying shares in the bank immediately prior to its dramatic rescue.

Disgraced former chief executive Fred Goodwin, as well as other former RBS directors, are named among the defendants in the cases brought by numerous private and corporate shareholders.

Now RBS, which has until now spent £100 million defending itself against the claims, has reportedly ordered lawyers to approach a group of five institutional claimants involved in one of the legal actions with a view to a potential settlement.

According to Sky News, the institutions involved include Aviva, Legal & General and the Universities Superannuation Scheme.

The Edinburgh-based bank releases its latest third-quarter financial results tomorrow and sources cited by Sky News said the outcome of the recent settlement talks mean the bank will have to increase the amount of money allocated to settle the cases.

Another, separate claim, comprising more than 300 pension funds and asset managers is also ongoing, alongside another representing tens of thousands of ordinary retail investors in the bank at the time of the 2008 rights issue.

Two other shareholder groups are also suing the bank, with all five of the cases brought together under a Group Litigation Order in July 2013 in an effort to reduce costs.

One source quoted said that a settlement could be reached with some of these shareholders within weeks, although neither side would comment on that possibility.

In its half-year results in August, RBS took a provision reported at £700m for the potential cost of concluding the shareholder lawsuits.

The charge that will be taken on Friday is not thought to be as large but is likely to run to hundreds of millions of pounds more.

“The aggregate value of the shares subscribed for at 200 pence per share by the claimant shareholders is approximately £4bn although their damages claims are not yet quantified,” the bank said at the time.

An attempt by RBS to reach a settlement took place during the summer, it added.

“In order to facilitate any potential early resolution of the litigation, RBS attended a mediation with the claimants on 26-27 July 2016,” it said.

“This did not lead to any settlement of the claims.

“Further attempts by the parties to resolve the claims are possible but absent any final agreement, these will not impact the court timetable.”

A six-month trial over the affair is scheduled for March, although the bank’s current leadership team is said to be keen to avoid the distraction of such a high-profile case during a period of continuing economic uncertainty.