Investors launch £4bn compensation claim against RBS
- 3 April 2013
- From the section Scotland business
Thousands of investors have launched a joint compensation claim for up to £4bn against Royal Bank of Scotland and several of its former directors.
The group claims the bank deliberately misled shareholders into believing it was in good financial health just before it collapsed in 2008.
More than 12,000 private shareholders and 100 institutional investors have raised a class action against the bank.
Former chief executive Fred Goodwin is among those named in the action.
Ex-chairman Sir Tom McKillop is also being sued, along with Johnny Cameron and Guy Whittaker, who were senior figures at the bank in 2008.
RBS has declined to comment on the development.
The institutions involved in the claim are understood to include 20 charities as well as churches, pension funds, hedge funds, fund managers and private client brokers. Collectively they manage in excess of £200bn.
The bank has 30 days to respond to the claim, which relates to a £12bn rights issue by RBS in 2008 to shore up its balance sheet after its disastrous acquisition of Dutch bank ABN Amro.
It is the second in recent days to be lodged against RBS.
Last week a group of 21 claimants launched a multimillion-pound lawsuit, also over its 2008 cash call.
The latest claimants said in a statement on Wednesday: "The action group maintains that the bank's directors sought to mislead shareholders by misrepresenting the underlying strength of the bank and omitting critical information from the 2008 rights issue prospectus.
"This means that RBS will be liable for the losses incurred on shares subscribed in the rights issue, by reason of breaches of Section 90 of the Financial Services and Markets Act 2000."
The action group estimated that the final claim may be as much as £4bn.
A spokesman for the investors said: "Today represents a giant step forward for the many thousands of ordinary people who lost money as the result of inexcusable actions taken by banks and their directors in the financial crisis.
"Now, for the first time, some of these directors will have to answer for their actions in a British court."
The class action has been raised with High Court of Justice's Chancery Division in London.
RBS was saved from collapse in 2008 by a UK government bailout and is now 82% taxpayer-owned.