Yahoo Finance Talks to avert RBS court case to continue into June
Attempts to avert a legal battle that would force Fred Goodwin, the former chief executive of Royal Bank of Scotland, to give evidence in the high court are to continue into next month.
Talks to agree a £200m settlement between investors and RBS have been going on for 48 hours. The high court was told on Wednesday that agreement had not been reached. If a deal is struck, it would prevent Goodwin being forced to testify in court next month.
Thousands of private investors and a handful of City institutions are considering the offer by RBS to settle their claim that they were misled into buying shares in April 2008, when the bank raised £12bn in an ill-fated rescue attempt.
The investors are making their claim for compensation from RBS, Goodwin and three former directors of the bank at the time of the cash call, which was made six months before the bank’s taxpayer bailout.
The case was due to start in central London on Monday. However, Mr Justice Hildyard has agreed to adjournit until 7 JuneHe set a deadline of 1 June for the parties to tell him if there was a deal.
Jonathan Nash QC, representing the shareholders, told the judge on Wednesday that while prospects of a settlement remained good more time was needed.
Asked by Hildyard what the impediments to a deal were, Nash said the shareholder group was not able to contact all its members. There were a “small number of shareholders whose current address does not appear to be correct”, he added.
The judge set a court hearing for 4pm on Thursday for an update and will require written updates next Tuesday and Thursday when the court is not sitting.
Nash had told the court on Tuesday the majority of the shareholders were minded to settle but by the end of that day there was no announcement about any agreement over the 11th-hour offer of settlement by RBS, made on Monday just hours before the long-running legal battle was due to begin.
The bank has settled with 87% of the shareholders who had brought claims relating to the April rights issue and it has nearly doubled its offer to the remaining group.
While the terms have not been confirmed it is thought the investors in the high court are being offered 82p a share – worth about £200m – compared with offers in the region of 42p agreed with the others.
Goodwin has been scheduled to give evidence for two days from 8 June – the first time since February 2009 that he would be forced to account for this actions at the helm of RBS. Eight years ago, when he appeared before the MPs on the Treasury select committee, he offered a “profound and unqualified apology for all of the distress that has been caused”.
The bank’s legal bills are expected to reach £125m if the case goes through the courts, while the investors’ legal bills are in part being paid by the businessman Trevor Hemmings. There have been reports that Hemmings, owner of Preston North End football club, is willing to accept the RBS offer, but they have not been confirmed.
RBS has not accepted liability during previous settlements for investors. It has set aside £800m for these cases but has said consistently it will defend itself in court.
