RBS Investors Accept $256 Million -- WSJ
May 30 2017 - 3:02AM
Dow Jones News
Settlement ends complaint that bank misled on emergency rights
issuance
By Max Colchester
A group of Royal Bank of Scotland Group PLC investors Monday
said they had accepted a GBP200 million settlement from the bank to
end a protracted legal fight over allegations the lender misled
them in the lead-up to an emergency rights issue during the
financial crisis.
The dispute relates to a GBP12 billion cash call just before RBS
was bailed out by taxpayers in 2008. Investors alleged they weren't
informed of the RBS's teetering finances before plowing more cash
into the sinking bank. A trial was due to get under way
imminently.
Organizers of the RBoS Shareholders Action Group, which includes
9,000 retail investors, said in a letter it had accepted an 82
pence-per-share settlement with the bank. This is well below the
GBP2 to GBP2.30 per share investors paid during the 2008 rights
issue. An RBS spokeswoman declined to comment.
The settlement may spare RBS the prospect of seeing former chief
executive Fred Goodwin cross examined in court. The Scot, who led
the bank to a taxpayer bailout, hasn't spoken about the debacle for
years.
Executives at RBS wanted to keep it that way. In the lead-up to
a trial they doubled their offer to the RBoS action group. Despite
the organizers of the RBoS group accepting the renewed offers some
shareholders may still seek to pursue the case, one person familiar
with the matter said. Late in 2016, the RBS set aside GBP800
million after settling with three-quarters of the shareholders
suing the bank.
For RBS the case is an unwelcome distraction to a drawn-out
restructuring plan. The bank, which remains more than 70%
government owned, said it would make its first profit in nearly a
decade next year. The turnaround has come at a steep price. RBS
burned through the GBP45.5 billion of taxpayer money pumped into it
during the crisis, paying off fines, firing staff and writing down
bad loans.
Write to Max Colchester at max.colchester@wsj.com
(END) Dow Jones Newswires
May 30, 2017 02:47 ET (06:47 GMT)
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