Royal Bank of Scotland (LON:RBS) shares rose on news that it is likely to avert a lengthy high court trial with shareholders suing it over its 2008 rights issue as it neared a settlement deal with claimants.
Shares rose 1.59% to 265.50p in afternoon trading.
The court trial that was meant to begin in London yesterday was adjourned for a second day in a row today as RBS continued settlement talks. The trial was due to begin yesterday and was expected to last 14 weeks but RBS made an 11th-hour settlement offer to avoid it from starting.
Shareholders have signalled they are willing to accept the bank's latest offer, which was said to have been raised to 82p from a previous 43p at a cost of more than £200mln.
Jonathan Nash QC, for the claimants, told a hearing today: "The majority of claimants have indicated their willingness to accept the latest offer from the defendant.
"There now appears to be a good prospect that within the course of today the remaining claimants, or nearly all, will confirm they also agree in principle so as to bring a practical end to proceedings."
Some 9,000 individuals and 20 institutional investors are suing RBS on claims they lost money after being misled over the bank’s true financial state during the £12bn rights issue. It was meant to stabilise the bank but the government had to spend £45.5bn to bail it out.
Disgraced ex-RBS boss Fred Goodwin could dodge witness stand....
A settlement would spare former boss Fred Goodwin from two days of court room scrutiny. Goodwin, who was ousted as the bank’s boss after its bailout, has been pencilled in to be cross-examined on 8 June, the same day as the general election.
It would be the first time Goodwin has spoken publicly about the events leading up to the bailout since February 2009 when he appeared before the Treasury select committee and apologised for “all the distress that has been caused”.
Goodwin was stripped of his knighthood in 2012 after overseeing the damaging €71.1bn takeover of Dutch ABN in 2007, which came just months before the rights issue.
RBS has already settled with 87% of the investors who had brought claims related to the rights issue but has not admitted liability.
The remaining shareholders suing the bank were demanding £520mln in compensation from the bank on claims they lost money on shares in the rights issue. The investors include US bank Wells Fargo, Bank of America Merrill Lynch, the Boeing pension fund and local British council pension funds.