RBS Share Price: Bank Facing £42 Million Legal Bill in Lawsuit over 2008 Capital-Raising

on Sep 19, 2013

iNVEZZ.com, Thursday, September 19: Royal Bank of Scotland Group Plc (LON:RBS) is facing a legal bill of £42 million to defend itself and former executives in a lawsuit over its controversial capital-raising from shareholders in 2008. The size of the legal bill emerged on the day of a preliminary court hearing. It was also confirmed that some of the bank’s most powerful institutional investors, including units of Standard Life and Legal & General, were considering joining the existing lawsuit or filing new complaints.

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In today’s trading, RBS shares were 0.12 percent down at 362.05p as of 8:25 BST.
**Legal bill**
Thousands of shareholders are suing RBS for more than £4 billion, claiming that the bank deliberately misled them over its financial health in the prospectus for a share offering designed to support RBS’s balance sheet after its disastrous consortium-led £45bn takeover of Dutch bank ABN Amro in 2007. Within months of the capital-raising, RBS nearly collapsed and had to be taken over by the state.

The cash call was conducted under the reign of former RBS Chief Executive Officer Fred Goodwin, who will be among those likely to give evidence, if a full hearing of the class action goes ahead. His legal expenses will be paid by the bank.
RBS, which confirmed it could face a legal bill of up to £42 million, said that was normal practice for banks to indemnify against legal action arising from their role as board members.

**Possibility of additional lawsuits**
!m[Big Institutional Investors Consider Filing Additional Claims](/uploads/story/5575/thumbs/pic1_inline.jpg)
Units of Legal & General Group Plc (LON:LGEN), Prudential Plc (LON:PRU) and Standard Life Plc (LON:SL) may join the existing lawsuits against RBS or file new claims, lawyers for the companies said yesterday in court documents prepared for at the preliminary hearing in London, confirming earlier reports suggesting the potential involvement of Standard Life Investments and Legal & General Investment and Management (Standard Life Share Price: Considering Legal Action against RBS).

The groups were “self-funded and have legitimate reasons in the interest of their stakeholders for needing
to retain control of their own litigation,” the court filing said.
The companies are part of a group that bought about 10 percent of the £12 billion 2008 rights issue. Their potential involvement would lend significant support to the existing shareholder campaigns for legal compensation. Earlier this month a City banker quoted by The Scotsman commented that the bank wouldn’t be happy with the involvement of SLI and L&G in the legal campaign.
**As of 8:14 BST buy RBS shares at 362.80 pence**
**As of 85:14 BST sell RBS shares at 362.50 pence**


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