THOUSANDS of investors have launched a joint compensation claim for more than £4.0bn against Royal Bank of Scotland, claiming the 82% state-owned 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 and are also suing former top RBS executives, including ex-chief executive Fred Goodwin, former chairman Sir Tom McKillop and former senior RBS figures Johnny Cameron and Guy Whittaker.
The institutions involved in the class action include 20 charities, 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.
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 the 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.
The taxpayer may well now be presented with another big bill to pay.
Meanwhile, a report into Barclays Bank has blamed ‘cultural shortcomings’ at the bank for the Libor-rigging scandal last year.
The Salz Review, commissioned by Barclays after it was fined £290m by UK and US regulators for attempting to rig the Libor rate, said, ‘Barclays became complex to manage, tending to develop silos with different values and cultures.’
There was an ‘over-emphasis’ on short-term financial performance, reinforced by a bonus and pay culture that rewarded money-making over serving the interests of customers and clients and a sense that senior management did not want to hear bad news.
