Investors launch £4bn RBS claim

Written By Unknown on Rabu, 03 April 2013 | 19.21

3 April 2013 Last updated at 05:43 ET

Thousands of investors have launched a joint compensation claim for up to £4bn against Royal Bank of Scotland.

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.

They are also suing former top RBS executives, including ex-chief executive Fred Goodwin.

Former chairman Sir Tom McKillop is also being sued, along with Johnny Cameron and Guy Whittaker, who were senior figures at the bank in 2008.

The institutions involved in the class action 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.

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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"

End Quote Action Group spokesman

In a statement, the investors said: "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.


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