A GROUP of institutional investors are preparing to grill former Royal Bank of Scotland chief executive Fred Goodwin in court in a bid for hundreds of millions of pounds in compensation over a £12 billion fund- raising conducted just months before the Edinburgh bank's collapse.

A claim form was issued against RBS at the High Court in London by legal firm Stewarts Law on behalf of 21 UK and overseas financial institutions and pension funds over what it claimed was a "defective" prospectus for the 2008 share sale.

Meanwhile, a separate £4bn claim by RBOS Shareholder Action Group, on behalf of 12,000 small investors, is just days from being launched, it said.

Clive Zietman, head of commercial litigation at Stewarts Law, told The Herald that if his case was successful, other investors could seek a pay-out.

"If a court were to find this prospectus was defective and compensation was paid, you would certainly expect all sorts of other shareholders to say 'can I have the same please'.

"It would set a precedent."

He said the only limitation was that any claim would have to be filed before April next year.

In the next few weeks, Stewarts Law will present a 30-page document spelling out its case – but any court hearing is 18 months away.

Mr Zietman said his clients, ranging from pension schemes for UK mineworkers to funds run by Dutch institution ING, were targeting only RBS itself for compensation, but said executives were likely to appear in court.

"One can imagine Fred Goodwin will have to give evidence to say why this prospectus was issued," he said.

Mr Zietman added: "Unless the matter can be resolved amicably, the claimants intend to pursue this litigation vigorously and through to trial."

RBS declined to comment.