RBS trial adjourned until June as deal talks continue

The civil trial involving Royal Bank of Scotland and a group of investors over a £12 billion rights issue by RBS in 2008 has been adjourned by a judge until next month as last-ditch attempts by RBS to reach an out-of-court settlement continue.

The investors allege the bank’s former executives misled them over RBS’s financial health ahead of the cash call.

Just months after the rights issue, RBS had to be rescued by the UK government with a £45.8 billion bailout and the bank is still more than 70% owned by the UK state.

The bank has already settled with 87% of investors who originally brought the case.

RBS is making strenuous last-ditch efforts to strike a deal with the remaining investors and avoid a potentially embarrassing trial that would involve testimony from disgraced former chief executive Fred Goodwin.

Judge Robert Hildyard on Wednesday adjourned the proceedings for the third time, to June 7, after days of negotiations failed to produce an out-of-court settlement — but the judge ordered both sides to notify him of any deal by June 1 or face the trial.

“We must have certainty one way or another … and that must be made clear,” Hildyard told London’s High Court.

The trial had been due to begin on Monday.

RBS denies any wrongdoing and says former executives did not act illegally.

Jonathan Nash, a lawyer for the claimants, said progress “remains good” for a settlement.

Nash blamed logistical problems in reaching a small number of shareholders for delays.

RBS is thought to have almost doubled its offer to the remaining investors from around 43.1p per share to 82p per share.

The latest offer could cost RBS another £200 million but is well below the 200p to 230p the shareholders paid for the shares in 2008.

The High Court was told on Tuesday morning that a majority of claimants were willing to settle the action.

The remaining group of investors includes 9,000 retail shareholders and 20 institutional investors including Bank of America Merrill Lynch, Wells Fargo, Boeing pension fund, and some British council pension funds.

A minority of the remaining investors, though, appear determined to take the case to trial.