Royal Bank of Scotland settles with more shareholders in rights issue legal action

William Turvill
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The dispute relates to a 2008 rights issue by the bank (Source: Getty)

Royal Bank of Scotland edged closer to ending its legal battle with shareholders today as it settled with a further raft of investors.

The lender announced it has now settled claims with 87 per cent of shareholders who brought the claim over a £12bn rights issue in 2008.

RBS had already settled with four out of five groups who brought the claim, representing 78 per cent of the total. The bank has now agreed a deal with a 40 per cent of the final group, bringing the total percentage of settlements to 87 per cent.

Read more: Treasury watchdog MPs put RBS under pressure over £125m legal defence costs

RBS said it had done so “without any admission of liability” and the bank, and some of its former bosses, are still due to appear in court next month. The lender’s legal costs for the case are set to hit £125m.

The first 78 per cent were awarded 41.2p for each of their RBS shares. A further 2p per share has been added to the latest settlement, reflecting legal costs for the claimants. RBS has therefore paid out around £700m so far.

City A.M. understands that the remaining claimants, part of the Royal Bank of Scotland Shareholder Action Group, include around 27,000 retail investors and about 20 institutional investors, including Bank of Ireland, Wells Fargo and Bank of America. Collectively, they will be claiming around £700m in court, including interest.

Chief executive Ross McEwan said: “We have been very clear that putting our legacy issues behind us is a priority so that we can focus on building the best bank for our customers, shareholders and employees.

“We are pleased to have reached this agreement.

“We will continue to explore the possibility of settlement with the remaining claimants but if we cannot settle on agreeable terms we will defend the claims at trial.”

RBS is due to report its first-quarter results on Friday morning.

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The Royal Bank of Scotland Shareholder Action Group said today that some of its members were included in the latest group of investors to have settled.

“Some claimants have concluded that they are willing to swallow large losses in return for some compensation,” the group said in a statement. “But for other institutions and most small shareholders, unfortunately, the calculation is different.

“Their lives and retirements have been blighted by this fraudulent fundraising, and they require fair compensation for the fraudulent behaviour of RBS under the stewardship of Fred Goodwin.

“RBS is evidently very keen to avoid a trial. Yet still it refuses to recognise the plight of 27,000 ordinary investors and make them a fair offer.”

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