Fred Goodwin was stripped of his knighthood last month. Photo / AP
Fred Goodwin was stripped of his knighthood last month. Photo / AP
Royal Bank of Scotland and former directors including ex-chief executive Fred Goodwin and ex-chairman Sir Tom McKillop have been hit with a £2.4 billion ($4.6 billion) legal claim from angry investors in the taxpayer bailed-out bank.
RBOS Shareholders Action Group was due to deliver claims letters to the bank and17 former directors, including the former head of investment banking Johnny Cameron.
These claim that RBS misled investors in the prospectus for its £12 billion rights issue to fund the takeover of the Dutch bank ABN Amro just five months before it had to be bailed out by the taxpayer.
The action group is backed by 7400 private shareholders and some 80 institutional investors, including Collins Stewart, Deutsche Bank, SG Hambro, Credit Agricole, State Street Securities and HSBC Global Custody. Ironically it also includes NatWest Stockbrokers.
The statement of claim, issued by the London legal firm Bird & Bird, is set to allege that RBS and its board withheld or misrepresented information about the true state of the bank's finances when it launched the rights issue in April 2008.
Investors suffered huge losses as a result of the bailouts.
In December of that year RBS received its first £20 billion state bailout, followed by a second round of taxpayer money worth £25 billion in December 2009.
RBS shares hit an all-time peak of 607p in March 2007. Following the takeover of ABN Amro the rights issue was launched at 200p a share.
The Government paid an average price of 50p a share for its 82 per cent stake. Today the share price is just 26.2p. The action group claims that Goodwin publicly denied the need for a rights issue, stating only two months beforehand: "There are no plans for any inorganic capital raisings or anything of the sort."
The Financial Services Authority did not take any action against Goodwin or any other RBS directors, despite stating that the bank's near collapse was due to poor management.
Goodwin was stripped of his knighthood last month.
