Reuters logo
RBS struggles to seal deal over 2008 cash call dispute - sources
May 24, 2017 / 6:12 AM / 6 months ago

RBS struggles to seal deal over 2008 cash call dispute - sources

* Settlement talks to continue on Wednesday - sources

* Former RBS CEO Goodwin scheduled to testify in June

* Bank has already settled with majority of claimant groups

By Andrew MacAskill

LONDON, May 24 (Reuters) - Royal Bank of Scotland is struggling to reach a deal with all the investors who allege the lender misled them during a 12 billion pound ($15.6 billion) cash call in 2008, two sources familiar with the situation said.

A trial over the matter had been due to start Monday, but has been adjourned for the past two days as lawyers said the two sides were optimistic they could strike a settlement.

Jonathan Nash, a lawyer for the claimant group, told London’s High Court on Tuesday the majority of shareholders involved in the lawsuit were willing to accept RBS’s settlement offer in principle and there was a “good prospect” of a deal.

However, sources said late on Tuesday that a number of shareholders in the 9,000-strong group suing the bank remained determined to reject RBS’s latest out-of-court settlement offer and take the case to trial.

“They (settlement talks) haven’t gone as expected,” one said.

A court hearing has been called for Wednesday morning at which both sides will detail any progress made in talks and could call for a further adjournment of the trial.

RBS declined to comment.

A spokesman for the investor group did not respond to requests for comment.

RBS almost doubled its out-of-court offer to investors on Sunday from around 43.1 pence to 82 pence per share, sources have told Reuters, in an effort to avert a trial that will rake over events that led to its near collapse and a state bailout at the height of the credit crisis.

The offer - set to cost RBS tens of millions of pounds - is below the 200 to 230 pence per share at which shareholders bought RBS shares in 2008 and denies investors the prospect of seeing the bank’s former CEO Fred Goodwin cross-examined in court.

Goodwin came to be seen as a symbol of banker recklessness during the financial crisis and has rarely appeared in public since he left the bank.

RBS, which remains more than 70 percent state owned, denies any wrongdoing and says its former executives did not act illegally.

Investors representing 87 percent of the original 4 billion pound damages claim have already settled their case. .

The remaining group, which includes thousands of current and former RBS employees, alleges RBS’s former executives deliberately hid over-stretched finances and failed to disclose that the regulator had ordered RBS to raise cash when it launched its rights issue in 2008.

Just months later, the government was forced to step in with a 45.8 billion pound taxpayer-funded bailout, the largest bank rescue in history. Shareholders lost around 80 percent of their investments.

$1 = 0.7717 pounds Writing by Kirstin Ridley; Editing by Rachel Armstrong and Mark Potter

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below