The hotly-anticipated High Court trial that pits Royal Bank of Scotland against investors left out of pocket by its 2008 rights issue is set to be adjourned for a second day in a row while an eleventh-hour settlement is hammered out.
The £125m High Court trial, whose defendants include former RBS chief executive Fred Goodwin, was due to begin yesterday morning, but was adjourned for 24 hours to enable last minute settlement discussions to continue.
City A.M. revealed last night that a further adjournment would be sought this morning barring any unforeseen developments overnight.
If the case is settled with all claimants out of court, disgraced banker Goodwin, once dubbed Fred the Shred, will escape his appearance in the dock under oath. It was unclear last night whether a final settlement would be agreed with all claimants - and when - due to the complexity of forging an agreement with 9,000 parties.
RBS, which is also a defendant in the case, has whittled down the number of claimants from the original 27,000 by agreeing a series of settlements.
Last December, 78 per cent of shareholders were awarded 41.2p for each of their RBS shares. A further 2p per share was added to a subsequent settlement last month, taking the number who had accepted a deal from the bank up to 87 per cent.
The bank said it had settled these claims “without any admission of liability”. The remaining group of 9,000 disgruntled investors, represented by the RBS shareholder action group, is understood to have been offered nearly double this award yesterday, with the lender putting forward an 82p-per-share settlement.
Sky News reported that Trevor Hemmings, a multimillionaire businessman who is funding part of the claim, had judged this offer sufficient. It would amount to the bank paying an estimated £200m in total.
The claimants, who include around 20 institutional investors, allege they were misled about the financial state of the lender before it issued a prospectus for a £12bn rights issue in April 2008. Shortly after the issue, RBS had to be bailed out by the taxpayer.
Goodwin, who was stripped of his knighthood because of his role in the bank’s collapse, is due to take the stand on 8 and 9 June should the trial goes ahead. If a settlement is not agreed with all shareholders the trial it is due to run into mid-July. If RBS was then held liable, a separate trial would be held to establish the size of the financial award.
The shareholders are claiming more than £800m between them.