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(qlmbusinessnews.com via telegraph.co.uk – – Tue, 6 June, 2017) London, Uk – –
Royal Bank of Scotland has finally reached a £200m settlement with thousands angry shareholders over its disastrous 2008 cash call, dashing hopes that its former chief executive Fred Goodwin would be forced to appear in the High Court.
It is understood that the action group representing the claimants in the civil case have agreed to an 82p-per-share offer that RBS made last month in a last-ditch attempt to avoid the 14-week trial.
The eleventh-hour offer from the bank was double the 41.2p-a-share at which most of the disgruntled investors settled in December last year, when the lender set aside £800m to resolve the matter.
The trial was due to start on May 22 but the judge, Mr Justice Hildyard, adjourned it three times to give RBS and the remaining claimants – 9,000 retail shareholders and about 20 institutional investors – the chance to agree to the more generous settlement offer the bank had made.
While most of the investors, including the main financial backer of the action, indicated they would accept the new offer, a smaller group of “diehards” initially rejected the deal.
The splintering of the remaining claimants between those wanting to fight on and those choosing to settle had led to conflicting messages and speculation that the trial might still proceed.
The situation was complicated by the involvement of Scottish businessman Neil Mitchell, an RBS shareholder in the midst of a separate legal action against the bank and who last night claimed the “diehards” had raised £7m to continue the legal action.
However, the leaders of an action group that is responsible for marshalling the claimants, as well as its lawyers, have now indicated to the judge that it is accepting the 82p deal. This means the trial, which would have started tomorrow, is now expected to be vacated.
A trial over the £12bn rights issue would have been expensive and highly embarrassing for the taxpayer-owned lender as Mr Goodwin and other former directors were defendants in the case. Mr Goodwin was stripped of his knighthood in the wake of RBS’s near-collapse during the financial crisis.
RBS, which remains 71pc-owned by the state, has already spent more than £100m preparing for the battle. Its legal bill would have risen by an estimated £29m if it had gone to trial.
The shareholders had claimed the bank misled them about its financial health in the prospectus for the rights issue. Just months later, RBS received a £45.5bn taxpayer bailout that inflicted huge losses on shareholders.
RBS denied the investors' claims.
By Ben Martin,
