Legal Business Blogs

RBS shareholders agree settlement ahead of court date signalling end of epic dispute

Some 9,000 Royal Bank of Scotland (RBS) shareholders have accepted a last-minute 82p per share out-of-court deal from the bank over its 2008 share sale, ahead of this morning’s court appearance.

The hearing is set to resume this morning in London’s High Court before Mr Justice Hildyard. A final settlement would draw to a close one of the most high profile and expensive commercial disputes to hit the London courts for years.

The majority of remaining claimants, represented by the RBS Shareholders Action Group, were prepared to accept an offer made last week in the rights issue damages claim against the bank and four of its former senior executives.

A few former investors, however, have been seeking further investment since being urged to settle last week by lead investor tycoon Trevor Hemmings and the RBS Action group.

One adviser close to the case told Legal Business that ‘for them it was no longer about the money, they want justice and Fred Goodwin [former RBS chief executive] to take the stand. But I would have been astounded if they obtained the extra funding to continue.’

The bank’s final offer of 82p per £1 remains a fraction of the 200-300p-per-share that claimants paid for RBS shares back in 2008, in the run-up to the bank’s £45bn public bailout.

The trial was due to open on 22 May, but was adjourned until 7 June for settlement negotiations following the last-minute offer.

The claim was launched in 2012 by around 27,000 retail investors who claimed they were misled about the bank’s financial health. It sought £12bn from investors in 2008 for a rights issue during the financial crisis.

Eighty seven percent of investors, represented by Stewarts Law, Mishcon de Reya, Quinn Emanuel Urquhart & Sullivan and some of Signature Litigation’s clients, had already settled with RBS for around £800m in total in December 2016 and April this year, at 41p and 43.2p per share respectively.

Over 9,000 claimants remained in the action after the majority of claimants settled with RBS for 41p per share in December 2016. In April 2017, 40% of the Signature Litigation Group also settled with RBS for 43.2p per share.

The original claimants included RBS staff and pensioners, institutional investors such as Wells Fargo, Boeing pension fund, Bank of America Merrill Lynch and Bank of Ireland. Some UK local authority pension funds, including Bedfordshire County Council, Essex, Nottinghamshire and the London Borough of Merton, also joined the litigation.

The remaining claimants have been represented by Signature Litigation partners Graham Huntley and Julian Connerty. RBS is represented by Herbert Smith Freehills, led by partners Simon Clarke, Adam Johnson and Kirsten Massey.

Goodwin, who was listed as a witness in the trial, is represented by Clifford Chance (CC) litigation partner Dorian Drew. K&L Gates head of litigation John Magnin is advising London and Northern Capital Partners (LNCP), owned by the majority funder in the litigation Trevor Hemmings.

Litigation boutique Hausfeld, led by partner Lianne Craig, represents asset recovery and private equity firm Hunnewell Partners (BVI).

RBS and the Shareholder Action Group have both declined to comment at press time.