RBS group accepts deal

A group representing Royal Bank of Scotland investors has accepted an out-of-court deal to settle a lawsuit that aimed to call disgraced former CEO Fred Goodwin to account over a £12bn (€13.7bn) cash call in 2008.

RBS group accepts deal

Organisers of the RBS Shareholder Action Group, that had vowed to see the bank and its former bosses in court, have told their members they will accept last week’s revised, out-of-court offer after days of intense talks delayed a long-awaited trial.

“Having carefully considered the merits of the current offer...we have decided to accept the offer of 82 pence per share on behalf of our membership,” the action group said in a letter, dated May 27.“This is a decision which is fully supported by our legal advisers,” it added, acknowledging that some of its claimants, who had been keen to hold out longer, might be surprised.

The deal will cost UK state-owned RBS around £200m, but spare it the embarrassment of having the lowest point in its near 300-year history raked over in court.

Mr Goodwin was first feted and knighted before RBS’s near collapse at the height of the credit crisis prompted the world’s biggest bank bailout. Shareholders lost around 80% of their investments. RBS, which owns Ulster Bank, had also pumped billions into the Irish unit during the crisis.

Sources familiar with the case said some shareholders within the group wanted to pursue the case against the bank, if they could find funding. An announcement on behalf of the group, which includes around 9,000 retail and 20 institutional investors and has been beset by internal wrangles, is expected.

Investors representing 87% of the claim had already settled their case after RBS put around £800m on the table last year.

In a bid to avoid a trial, RBS almost doubled its initial offer to 82 pence per share, from 43.1 pence per share, last weekend. A deal had been expected.

Jonathan Nash, a lawyer for the claimant group, told London’s high court last week that the majority of shareholders were willing to accept RBS’s offer and there was a “good prospect” of a final settlement.

RBS’s final offer remains a fraction of the 200 pence to 230 pence per share that shareholders bought RBS shares at in 2008 and denies investors the prospect of seeing Mr Goodwin cross-examined in court.

Mr Goodwin became a symbol of banker recklessness and greed during the credit crisis.

Reuters

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