LONDON: Two lawsuits brought against Royal Bank of Scotland by shareholders who say they were misled into taking part in a 2008 cash call could cost the bank over £4bn ($6.1bn) if successful, court documents showed yesterday.
Thousands of shareholders are suing for compensation for losses incurred as a result of the £12bn ($18.4bn) rights issue in April 2008, months before RBS came close to collapse and had to be taken over by the state.
The shareholders, organised into two groups who have filed separate claims, allege that the prospectus for the capital raising failed to paint a true picture of the bank’s deteriorating financial position.
A first court hearing took place yesterday at the High Court in London. The litigation is in its early stages and the hearing was about how it should be structured rather than about the substantive issues.
The largest group, the RBoS Shareholders Action Group, is made up of about 12,000 shareholders including over 100 institutional investors. It is suing both RBS itself and four of its former directors, including disgraced ex-CEO Fred Goodwin.
Dubbed “Fred the Shred” for his cost-cutting policies, Goodwin received a knighthood for services to banking in 2004 but was widely blamed for many of RBS’s later troubles, and was stripped of his title in 2012. The lawsuit from the Action Group could eventually force him to defend his actions in court. The group’s lawyers have already filed claims worth a total of about £900m on behalf of some of its members. Reuters
