More than 27,000 RBS shareholders nearly wiped out in the bank’s 2008 rights issue are due compensation of up to 94.5p in the pound, or more than £1bn, according to an independent report commissioned by the investors and seen by City A.M.
The shareholders, part of the RBS Shareholder Action Group, are heading to court today to finalise arrangements for a landmark hearing next year. City A.M. understands the group wants the hearing moved from March to April to accommodate new lawyers, and for former RBS chief exec Fred Goodwin to be a lead witness.
The RBS Shareholder Action Group, whose lawyers are Signature Litigation, represents several institutions as well as 27,000 retail shareholders including more than 4,000 RBS employees.
They are suing the bank and former management for allegedly misleading investors ahead of a £12bn fundraising in 2008. The bank subsequently required a £45bn taxpayer rescue, wiping off most of the share value.
In a paper commissioned by three claimant groups and seen by City A.M., economic consultant Brattle concluded that the true value of RBS rights issue shares in 2008 was between 0p and 11p, rather than the 200p price that RBS charged at the fundraising on 9 June 2008.
This could imply potential damages of 94.5p in the pound, equivalent to £1.1bn, should the bank be found guilty. It is believed the RBS Shareholder Action Group is holding out for this amount although some commentators say the share price is irrelevant to calculating any award.
RBS has made a settlement offer of £800m to all groups, covered by existing provisions, but has made no admission of liability. Institutional investors represented by Stewarts Law and Quinn Emmanuel Urquhart & Sullivan have said that they will accept the offer, which is equivalent to just 21p in the pound at the time of the fundraising.
The bank, still 72 per cent owned by the taxpayer, said at the time of the offer earlier this month: “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.”
Ross McEwan, CEO of RBS, said: “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.”
The RBS Shareholder Action Group declined to comment yesterday.
The bank is facing a raft of other challenges including a multi-billion-dollar fine from the Department of Justice for misselling mortgage-backed securities.