Fred Goodwin, the disgraced former boss of Royal Bank of Scotland (LON:RBS), finds out on Thursday for certain whether he will have to face the court room over the bank’s 2008 rights issue.
The High Court in London will hear the case to decide whether it should proceed to trial after RBS settled with investors suing the bank to recoup their losses in the £12bn cash call.
The RBS Shareholder Action Group, which includes 9,000 members, has accepted the bank’s 82p a share offer – almost double the compensation originally proposed.
The investors claimed they were misled over the bank’s true financial state before the rights issue, which was meant to stabilise RBS but the government had to spend £45.5bn to bail it out shortly afterwards.
They had been holding out for a settlement of up to 234p a share as most had paid 200p a share in the rights issue. But a claimant who was financing the legal action decided to accept the offer, meaning they no longer had enough funds to take the case to trial.
Goodwin is now likely to avert a cross-examination on the events leading up to the bank’s 2008 bailout, though some shareholders may pull together the funds for a trial to force him into a court appearance. The trial was expected to last 14 weeks with Goodwin in the witness stand for two days.
Goodwin, who was ousted as the bank’s boss after its bailout, has not spoken publicly about the bank’s rescue deal since February 2009 when he appeared before the Treasury select committee and apologised for “all the distress that has been caused”.
He was stripped of his knighthood in 2012 after overseeing the damaging €71.1bn takeover of Dutch ABN Amro in 2007 that prompted the rights issue.
RBS will pay out about £200mln to settle with investors in the rights issue and faces £25mln in defence costs if the case goes to trial.
The bank has drawn criticism from politicians over its mounting legal costs as it is still 72% state-owned. Former business secretary Vince Cable said while Goodwin deserves to face court room scrutiny, taxpayers should not be footing the “obscene” bill in defending him and his associates.
Other notable events expected on Thursday:
Finals: FirstGroup (LON:FGP); Johnson Matthey PLC (LON:JMAT); ImmuPharma PLC (LON:IMM)