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The
state-controlled British bank said on Monday it had struck a
deal with three of the five investor groups involved in the
lawsuit. It is now trying to reach an agreement with the others
in order to avoid a potentially embarrassing trial.
Thousands of retail investors have yet to agree to the split
settlement, which adds a fresh dimension to an unprecedented
English lawsuit that stands out for its size and complexity.
The investors allege RBS failed to give them a proper picture of
its finances during a 2008 fundraising.
They lost most of their money when RBS nearly collapsed a few
months later and had to be bailed out by the British government,
costing taxpayers more than 45 billion pounds.
Monday's deal includes a settlement with Standard Life, Legal &
General, Aviva and Prudential and the Universities
Superannuation Scheme (USS), which together bought about 10
percent of the 2008 share issue.
SENSE OF RELIEF
RBS is attempting to settle a range of fines and lawsuits
related to its alleged misconduct before and during the
financial crisis, which have hindered its plans to return to
profit and private ownership.
Last week, the bank was the biggest failure in the Bank of
England's annual stress test of lenders, partly because of a
mounting legal bill for misconduct that analysts and lawyers had
previously estimated could cost the bank up to $27
billion..Although RBS has set aside an unprecedented amount to
cover an out-of-court settlement for a case involving
allegations of misrepresentation, it represents a good deal for
the bank, according to Ian Gordon, an analyst at Investec. "If
it leads to a settlement with all the parties I would
characterize that with a sense of relief," he said.
Chief Executive Ross McEwan welcomed the partial settlement as a
sign RBS is a drawing a line under its troubled past and said he
hoped the remaining groups would accept the offer. RBS shares
were up 1.1 percent to 195.5 pence at 1118 GMT.The deal moves
the bank closer to avoiding a lengthy trial scheduled for March
next year that could force its former executives to take to the
stand to discuss the darkest period in the bank's almost
three-century history.Reuters previously reported that RBS
ignored warnings from senior advisers about estimated losses
that would be reported in the prospectus for its rights issue in
order to portray the bank in a falsely healthy light.The bank
also avoided repricing billions of dollars of souring
investments on the eve of the 2008 financial crisis for fear of
endangering bonuses and a takeover bid for a rival, court
documents showed.
(Additional reporting by Sophie Sassard; Editing by Mark Potter
and Alexander Smith)
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