FRED Goodwin is unlikely to face angry investors in Royal Bank of Scotland after shareholders accepted a settlement over claims they had been misled about the bank’s health when asked to buy £12 billion of new shares.
Mr Goodwin was set to give evidence in the High Court in a case brought by the RBoS Shareholders Action Group, following a rights issue in 2008 that saw investors lose 80 per cent of their money.
The group has confirmed it has accepted a settlement of 82p per share. The offer is almost double what Royal Bank initially offered, but below the 92p the group were pursuing, and far short of the 200 to 230p that was initially invested by the group.
"Having carefully considered the merits of the current offer... we have decided to accept the offer of 82 pence per share on behalf of our membership," the action group said in a letter, dated May 27, which was published yesterday.
The deal will cost Royal Bank, which remains 72 per cent owned by the tax payer, about £200m. The bank had already set aside £800m to settle with 87 per cent of claimants.
RBoS Shareholders Action Group was founded to take legal action on behalf of about 27,000 shareholders who subscribed to the rights issue in 2008.
The group believes that the board, led at the time by Mr Goodwin, misrepresented the underlying strength of the bank at the time and omitted critical information from the prospectus.
Just months after securing the £12bn investment, RBS was saved from collapse with a £45bn bail out by the UK Government It is believed that a small portion of the investors were not willing to settle for any amount, preferring to see Mr Goodwin – who was stripped of his knighthood for his role in Royal Bank’s demise – face the courtroom The group acknowledged this in its letter, noting that “we understand that accepting an offer of slightly below the previously advised range… may be surprising to some claimants.
It added that a number of practical and legal risks had to be considered in accepting the offer.
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