UPDATE 3 — The RBoS Shareholder Action Group, which alleges investors were misled by Royal Bank of Scotland over its £12 billion rights issue in 2008, has told its members it is ready to accept settlement terms on offer from the bank.
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 action group has sent out a letter to claimants saying that “having carefully considered the merits of the current offer … we have decided to accept the offer of 82 pence per share on behalf of our membership.”
The shareholder group said there were “a number of practical and legal risks which had to be considered.”
It added: “This is a decision which is fully supported by our legal advisers.”
The bank has already settled with 87% of investors who originally brought the case.
The civil trial involving RBS and a remaining group of investors has been adjourned by a judge until next month amid last-ditch attempts by RBS to reach an out-of-court settlement.
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 last week 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.
RBS denies any wrongdoing and says former executives did not act illegally.
The shareholder group added in its letter: “We understand that accepting an offer of slightly below the previously advised range of damages, being 92 pence per share and 234 pence per share, may be surprising to some claimants.
“However, there are a number of practical and legal risks which had to be considered …
“The longer the case continues, the more cost will be expended in legal fees and other costs, which will result in more deductions from any damages award.
“Put simply we would have to significantly ‘beat’ the current offer of 82p to put the claimants in the same position as they would now be in, further down the line.
“The claim is presently being funded by a substantial claimant in the action.
“That claimant has decided to accept the offer and they are no longer willing to fund the action.
“That means that there is currently no available funding to fund the legal and other costs to take the matter to trial.
“If unsuccessful at the liability trial (or any subsequent appeals), there will be a nil recovery, and some or all of the claimants may be pursued for the Bank’s costs, which are considerable.
“All of the corporate claimants have now indicated that they will accept the 82p offer.
“This means that the number of claimants continuing the action would be significantly reduced in size …
“Taking into account all of the relevant factors, we have come to the conclusion that it is in the best interests of all claimants for us to accept the 82p per share offer.
“This is a significant sum and is effectively double the amount that was paid to the other settling claimant groups.”