Royal Bank of Scotland pursued last-minute settlement talks with a group of investors to avoid a potentially embarrassing trial over allegations the lender misled them about a 2008 capital increase.
A successful settlement would save former RBS chief executive Fred Goodwin from facing scrutiny in the courts over his decision-making and leadership at the time the lender almost collapsed. RBS — which also owns Ulster Bank — has doubled its offer to the remaining claimants as it seeks to settle the case, according to sources.
The civil trial brought by thousands of RBS investors was due to open at the high court in London on Monday but was adjourned for a day to allow the settlement talks to continue. The plaintiffs allege former executives gave a misleading picture of the bank’s financial health ahead of a £12 billion (€14bn) cash call in 2008. Months after the cash call, RBS had to be rescued by the UK government with a £45.8bn (€53bn) bailout.
RBS, which remains more than 70% owned by the British state, denies any wrongdoing over the 2008 rights issue and says its former bosses did not act illegally. Jonathan Nash, a lawyer representing the claimants, appealed in court for an adjournment saying the two parties were in settlement talks and wanted longer to strike a deal. “We are involved in settlement discussions and we are hopeful of making progress,” Mr Nash said.
The sources said RBS chief executive Ross McEwan was directly involved in talks over the weekend and the bank had offered more than 80 pence for each RBS share, though it was not clear if any investors have accepted the offer. A settlement at that price would cost RBS “in the tens of millions of pounds”, a source said.
The bank has settled with 87% of the investors who originally brought the case but the others have so far rejected its offers and say they were determined to go to court. By doubling the amount on offer, RBS is close to a sum the remaining investors would accept, indicating that they might settle if RBS raises its offer to 100 pence per share. That represents half of the 200 pence per share investors paid. The outstanding group represents about 9,000 retail shareholders and 20 institutional investors. The large investors include US bank Wells Fargo, the Boeing pension fund, and local British council pension funds.
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