Royal Bank of Scotland offers to sweeten the deal for the shareholder action group refusing to settle over 2008 cash call claims

Hayley Kirton
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Investors Launch £4bn Compensation Claim Against The Royal Bank Of Scotland
If the case does go to court, it is likely ex-chief exec Fred Goodwin will give evidence (Source: Getty)

Royal Bank of Scotland (RBS) has increased its settlement offer to a group of shareholders suing the bank over the way it handled its 2008 rights issue.

The bank has recently reached 41.5p-per-share deals with four shareholder groups bringing legal action against the handling of the £12bn cash call, which took place shortly before RBS had to be bailed out by the state to the tune of £45bn.

Now, Sky News has reported lawyers for the lender, which is still 73 per cent taxpayer-owned, have extended a 43.5p-per-share settlement to the RBoS Shareholder Action Group, the last group yet to settle.

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However, the group is also reported to be less than impressed with the new offer and many are determined to see the case go to trial this summer.

Should the case go to court, it is more than likely RBS's ex-chief executive Fred Goodwin will be called on to give evidence.

City A.M. reported last December the group, which is being overseen by Signature Litigation and consists of institutional investors and 27,000 retail shareholders, including more than 4,000 RBS employees, was holding out for a compensation package worth around £1bn in total.

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However, in a more recent court hearing, a judge called on the group to disclose further details of their funding plans, as fears grew they would be unable to cover the legal costs of the case should they lose.

The bank has so far shelled out more than £100m defending the claim.

Both RBS and a spokesperson for the Shareholder Action Group declined to comment.

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Last month, the bank revealed it was in the red for the ninth year on the trot, reporting a loss of £7bn in its 2016 full-year results.

The mega-loss was in part thanks to spiralling legal charges – the lender booked £5.9bn in litigation and conduct costs for the year.

The costs included a £3.1bn charge to the bank's provision for an outstanding US Department of Justice fine for mis-selling mortgage-backed securities. Some estimates suggest the final fine might be as high as $12bn (£9.6bn) and it has been cited as one of the reasons the government has not been able to shed its stake as yet.

Read more: RBS' chief exec just got awarded £1.2m worth of shares in the bank

The Treasury sold part of its original 78 per cent holding in RBS in summer 2015 for 330p per share, a steep discount on the roughly 500p per share the stake was originally purchased for.

RBS was also recently agreed to put aside £400m to compensate small businesses, which claim they were mistreated while in its Global Restructuring Group (GRG).

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