RBS Settles Dispute With Three Shareholder Groups Over 2008 Rights Issue -- Update
December 05 2016 - 3:34AM
Dow Jones News
By Max Colchester
Royal Bank of Scotland Group PLC Monday said it would pay up to
GBP800 million ($1.02 billion) to settle claims with shareholder
groups over allegations that it misled them in the lead up to an
emergency rights issue during the financial crisis.
In a statement, RBS said it had concluded settlements with three
out of the five shareholder groups without admitting fault and said
that it would "vigorously defend" claims from any parties that
wouldn't settle. The dispute relates to a GBP12 billion cash call
just before RBS was bailed out by taxpayers in 2008. The GBP800
million has already been set aside in RBS's accounts. RBS continues
to negotiate with the remaining two groups and if no agreement is
reached, then a trial is due to commence in 2017.
Shareholders were suing the bank for GBP4 billion after alleging
management at the time weren't transparent about the bank's
financial health when it tapped them for funds. The bank said that
77% of those claims are now settled.
RBS, which is 73% government owned, entered into talks with the
shareholder groups earlier this year. Management at the bank have
wanted to settle the dispute that has proved a distraction from a
grinding turn around plan. One of the groups, the RBoS Shareholder
Action Group, which represents thousands of retail investors, has
pledged not to settle as it wants RBS's former management,
including then Chief Executive Fred Goodwin, to face a trial.
RBS continues to face a number of legal woes, including having
to hash out multibillion-dollar settlements with U.S. authorities
over the sale of toxic mortgage-backed securities.
Separately the bank's conduct and regulatory affairs officer,
Jon Pain, is due to retire at the end of the year as the bank
reshuffles the way it deals with litigation issues, according to a
memo recently sent to staff.
Write to Max Colchester at max.colchester@wsj.com
(END) Dow Jones Newswires
December 05, 2016 04:19 ET (09:19 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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