Mortgage News
RBS to be hit by second shareholder legal claim
The Royal Bank of Scotland is reportedly being sued by 21 of its shareholders, including ING and pension funds such as the Illinois Teachers’ Retirement System, which all bought shares as part of the bank’s £12bn rights issue in 2008.
The shareholders are claiming for hundreds of millions of pounds, according to a story in the Financial Times, over the material omissions in the 2008 rights issue prospectus.
The claimants assert the rights issue portrayed the bank as healthy and stable whereas if shareholders had known the truth the issue would have been severely impacted, said the claimant’s law firm.
RBS raised £12bn through a rights issue in April 2008, a month after US bank Bear Stearns was rescued by JPMorgan.
Less than six months later, the UK government had to bail out RBS with £20bn. The bank remains 82% owned by the taxpayer.
Claimants are looking for compensation for the difference between the plunge in share price and the actual value.
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This is the second lawsuit filed in the UK courts along similar lines, with 7,500 individual claimants already gunning for RBS, as well as institutional shareholders including Deutsche Bank.
The bank has successfully seen off two similar US lawsuits filed by shareholders, which were thrown out of court last year.
RBS declined to comment.