RBS Makes Last Attempt With Settlement Offer To Investors

British banking firm, the Royal Bank of Scotland (RBS) is said to be close to settling with investors in a last-minute attempt to stop the case regarding its 2008 rights issue from going to court.

The bank has doubled its offer to 82 pence per share, from its earlier offer of 43.2 pence for the claimants of the class action suit, according to internal sources.

Chief Executive Officer Ross McEwan is said to have stepped in personally to intervene as the suit could have resulted in former CEO Fred Goodwin being presented as a witness.

Jonathan Nash, a lawyer for the investors, said in a court hearing that both sides were hopeful of a satisfactory result after the improved offer. The judge consequently delayed the trial start date by a few days. The trial was originally expected to begin on May 22.

Sky News

First filed in March 2013, the legal class action suit has over 27,000 claimants who are asking almost £4 billion in settlement. RBS has so far set aside £800 million for its settlements. Some investors groups agreed to settlement offers made last year but others have held out including one of which who has demanded £520 million. One investor group accepted a 43.2 pence offer from RBS last month while another accepted a 41.2 pence-a- share deal in December 2016.

Investors allege that the bank headed then by Goodwin had misled investors about the health of the bank ahead of a £12 billion rights issue before the 2008 financial crisis. The subsequent collapse of the bank led to a government bailout which saw shareholders’ investment being wiped out.

As a part of the trial, Goodwin and several other top executives are expected to appear as defendants. The bank claims that there was no cover-up with regards to the rights issue as all necessary information was available in the prospectus. It holds that the claimants were not considering the volatility of the markets in 2008.

The trial could be embarrassing to RBS as it would put the spotlight on the actions of its former executives during the financial crises. Last minute offers to settle are common tactic for high profile legal cases as it avoids the damage from the unwanted publicity. Societe Generale SA agreed to pay 963 million euros earlier this month in order to make reach a settlement with the Libyan Investment Authority.

According to sources close to the investor groups, they are very close to agreeing to RBS’ latest offer.

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