RBS investors press bank’s chief to increase offer in legal dispute

A group representing thousands of aggrieved Royal Bank of Scotland shareholders met the bank’s chief executive on Friday to push for a higher payout in their legal battle despite signalling this week that the investors were prepared to settle.

The claim has been brought by RBS shareholders who allege they lost nearly all of their investment in a £12bn rescue funding launched by the lender in June 2008 — only months before it received the biggest bank bailout in UK history.

On Monday, the RBS Shareholder Action Group, which represents 9,000 investors involved in the case, said it would accept 82p per share to settle the case.

However, some shareholders within the group, including former and current RBS employees, are still vying for compensation above that level, according to people briefed on the situation.

They are “not happy” with the offer, according to one of those people.

The action group met Ross McEwan, RBS chief executive, on Friday on behalf of these investors.

RBS told the investors it would not increase its final offer, according to one of the people. The bank doubled its offer last month hours before the trial was due to commence.

The stalemate means Fred Goodwin, the disgraced former chief executive who oversaw the bank’s calamitous collapse, could still appear in the trial, which is due to start on Wednesday. The trial has been adjourned three times over the past two weeks.

Neil Mitchell, one of the shareholders, said the group calling for higher compensation involved pensioners. “There’s a lot of hardship cases where people put their nest egg into the rights issue,” he said.

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The action group is in the process of boosting its funding to £10m to cover the cost of the trial, which could prove to be a key stumbling block.

The group said last week in a letter to members that the action had been funded by “a substantial claimant”, who had decided to accept the offer and was no longer willing to support the claim financially.

Investors who backed the rights issue claim the prospectus contained misleading information about RBS’s financial position under Mr Goodwin’s leadership and want compensation. RBS and the directors deny wrongdoing.

A number of investors recently told the Financial Times they were unwilling to settle because they wanted to see Mr Goodwin, who was stripped of his knighthood in 2012, held to account and for the “truth” to emerge.

Mr Goodwin has rarely been seen in public since RBS’s near collapse and agreed to reduce a £700,000 annual pension only following a very public battle. He still lives in Edinburgh.

The action group constitutes about a third of claimants represented by Signature Litigation, with the remainder comprising institutions and retail investors who bought shares through investment platforms. Signature needs 70 per cent of the claimants by value to accept the settlement to make it binding.

RBS and the Shareholder Action Group declined to comment.