Investors file lawsuit against Royal Bank of Scotland

The Royal Bank of Scotland (RBS) has said it is ready to defend itself against investors, who will this week file a £1 billion claim against the bank over a rights issue dating back to 2008.

Five of Britain’s biggest investors, including Legal & General, Standard Life, Prudential, Aviva and Universities Superannuation Scheme, will bring the claim before the courts on Wednesday, claiming they were misled by bank employees, but the bank has defended its actions, claiming that it will put forward a strong case in court.

The former boss Fred Goodwin, known as “Fred the Shred” after his part in the massive bail out of the bank by the British taxpayer, asked shareholders to pump around £12 billion into the books, following which shares dropped dangerously low when it lost billions on the US markets.

A spokesperson for the bank said, “While RBS and its former directors made some business decisions that have been criticised, this does not mean that they misled investors or acted illegally.

“We believe we have strong defences to the claims that are being brought against the group and that is why we intend to defend these vigorously and to protect the interests of our shareholders including UK taxpayers.”

The claims follow criticisms over bonus payments to senior staff at RBS, which were forced once again under the spotlight last week. UKFI, the body responsible for managing the British governments 81% stake in the bank, blocked proposals to pay 200% of salaries in bonuses.

Photo: Elliott Brown via Flickr

Further reading:

RBS bonuses blocked by government

RBS reports losses of £8.2bn – and employee bonuses of £576m

Cameron defends bankers’ bonuses at RBS after Labour criticism

RBS needs to run, not walk, to become an ethical banking leader

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