RBS edges towards investor settlement after bank makes 11th-hour offer


It is thought that one of the main financial backers of a shareholder action group that is taking the taxpayer-owned lender to court is minded to accept a settlement with RBS, after the bank doubled the offer it was prepared to make to investors, reports The Telegraph.

An agreement would put a stop to a 14-week trial that was originally due to kick-off today and which would force RBS’ former chief executive Fred Goodwin to take to the witness stand.

Investors have accused RBS of misleading them about the true state of its financial health in the prospectus for the £12bn rights issue almost a decade ago, allegations the lender denies. Just months after the cash call RBS was forced into a government bailout, inflicting losses of around 80pc on investors who had backed it in the fundraising.

The highly-anticipated court battle over the shareholders’ claims was postponed at the eleventh hour today after Ross McEwan, the lender’s boss, personally intervened in last-ditch negotiations over the weekend to hike the bank’s settlement offer to 82p-a-share.

That prompted Jonathan Nash QC, who was acting for the claimant shareholders in the hugely complicated civil case, to ask Mr Justice Hildyard to delay the start of the trial for 24 hours this morning because he was “hopeful of making progress” towards a settlement. The judge agreed to the adjournment in front of a packed courtroom.

The trial was later pushed back further to Wednesday after representatives of the claimants confirmed “significant progress” had been made in light of RBS’s “greatly increased” offer.

The action group, which comprises 9,000 retail investors and about 20 institutional shareholders, is backed by Trevor Hemmings, the tycoon who owns Preston North End football club. Mr Hemmings is believed to be inclined to accept the last-ditch offer made by RBS.

It remains unclear what stance the majority of investors in the action group will take towards the offer and whether some will attempt to press on with the legal action. The group has already splintered once, with about 18,000 retail investors and some City investors accepting a 43.2p offer from RBS late last month.

Separately, another four claimant groups of investors that were originally part of the lawsuit accepted a 41.2p-a-share deal with RBS in December, when the bank put aside £800m to settle the legal action.

A trial would be a costly blow to RBS as it would lead to months of public scrutiny of the actions of its former bosses during the financial crisis, when the bank had to be bailed-out.

The lender has already spent over £100m preparing for the trial and is expected to rack-up a further £25m in costs if it goes ahead, one of the most expensive legal bills in the history of the High Court.

It would push Mr Goodwin, who was stripped of his knighthood following the financial crisis, back into the spotlight, as well as other former directors, including ex-chairman Tom McKillop, who are also defendants in the lawsuit. Mr Goodwin, who was nicknamed “Fred the Shred” for his ruthless cost-cutting, took the brunt of public anger during the crisis.