RBS braces for trial over 2008 share sale case | Reuters

By Andrew MacAskill and Lawrence White

LONDON Royal Bank of Scotland (RBS.L) is set to face a trial it had hoped to avert over its 2008 share sale, as the last group of holdout investors in the case secured the funds they need to proceed to trial, a source involved in the claim said on Monday.

The claimants will receive the remaining 2 million pounds ($2.58 million) of the 7 million pounds needed to convince a judge on Wednesday they can fund what is likely to be a lengthy trial, according to Scottish businessman Neil Mitchell, a former customer and critic of the lender.

Investors told Mitchell and a representative of the RBS shareholder action group that they would provide the funds at a meeting in London’s Lanesborough Hotel on Monday evening, Mitchell said, paving the way for the trial to start this week.

RBS (RBS.L) has offered around 900 million pounds in settlements so far to avoid a costly and potentially embarrassing lawsuit alleging it misled investors before its near collapse in 2008.

The bank was bailed out to the tune of around 45.8 billion pounds just months after its cash call. Shareholders, including thousands of current and former RBS employees, lost around 80 percent of their investments.

RBS meanwhile has refused to raise its settlement offer to those shareholders still suing the bank, different sources with knowledge of the matter said, meaning the case will go to trial barring a last-minute change of heart by either side.

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Chief Executive Ross McEwan told shareholders they face a take-it-or-leave it offer to settle out of court before the claimants must inform a judge on Wednesday if they plan to pursue the case, sources close to the matter said.

On Wednesday, McEwan will find out whether that strategy has been successful or the trial he sought to avoid will proceed.

RBS and lawyers representing the claimants declined to comment.

Roughly two thousand claimants still holding out for a trial are all that remain of the more than 27,000 investors at the outset of the action, which threatened to be one of the costliest in British legal history.

The holdouts needed around 7 million pounds to fund their claim, of which they have raised 5 million, the sources said, meaning the final two million raised on Monday is enough.

Judge Robert Hildyard two weeks ago adjourned court proceedings for the third time to June 7 in the case that will determine whether RBS and its former bosses misled shareholders about the state of its finances when it launched the 12 billion pound share sale.

The difference between what many of the shareholders will accept and what the bank is offering is as little as 20 million pounds, according to sources with knowledge of the talks.

But McEwan has told the claimants he is not putting any more money on the table, one of them said.

RBS’s thinking is that it has to protect the interests of current shareholders in the bank by not paying out too much in settlements.

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A deal had been expected. Jonathan Nash, a lawyer for the claimant group, told London’s High Court on Tuesday the majority of shareholders were willing to accept RBS’s offer and there was a “good prospect” of a final settlement by Wednesday morning.

RBS, which remains more than 70 percent state-owned, denies any wrongdoing and has said its former bosses did not act illegally.

(Reporting by Andrew MacAskill and Lawrence White; Editing by Mark Potter and Diane Craft)