Exclusive: Top UK investors to file $2 billion legal claims against RBS - sources

A sign is seen outside a Royal Bank of Scotland building in central London
A sign is seen outside a Royal Bank of Scotland building in central London January 28, 2014. REUTERS/Paul Hackett

By Steve Slater and Chris Vellacott

LONDON (Reuters) - Five of Britain's biggest investors are set to file lawsuits against Royal Bank of Scotland (RBS.L) next week, saying they were misled over its massive rights issue in 2008 and claiming more than 1 billion pounds back, sources said.

Legal & General (LGEN.L) - the biggest investor in RBS at the time of the rights issue - and Standard Life (SL.V), Prudential (PRU.L), Aviva (AV.L) and Universities Superannuation Scheme (USS) are all expected to file claims in a London court on Wednesday, five people with knowledge of the matter told Reuters on Friday.

Former RBS boss Fred Goodwin asked shareholders to stump up 12 billion pounds in May 2008 to bolster the bank's capital position, which fell dangerously low after it bought parts of ABN Amro and lost billions on U.S. credit market assets.

Some of the lawsuits already filed against RBS over the rights issue also sue Goodwin and former chairman Tom McKillop, along with other former executives. RBS is now being run by a new team and is 81-percent owned by the government which still had to bail it out despite Goodwin's money-raising exercise.

The case is likely to take years to resolve and could cost RBS billions of pounds in compensation. It could also see Goodwin hauled into court as the bank's key witness.

RBS said it would defend the claims.

"While RBS and its former directors made some business decisions that have been criticized, this does not mean that they misled investors or acted illegally," it said.

"We believe we have strong defenses to the claims that are being brought against the group and that is why we intend to defend these vigorously and to protect the interests of our shareholders including UK taxpayers."


L&G, Standard Life and Prudential's M&G Investment Management were all top 10 shareholders and invested up to 1.2 billion pounds in the rights issue, according to Reuters calculations based on holdings at the time. USS and Aviva Investors were smaller investors, but both in the top 40.

They have all appointed law firm Quinn Emmanuel.

The top shareholders have been considering their position since last year, and their decision to file lawsuits should take claims against RBS well over 4 billion pounds.

The investors and Quinn Emanuel declined to comment.

There has been a rush of investors to join several action groups set up to take action against RBS, lawyers involved in the case have told Reuters.

That is because Wednesday will mark the sixth anniversary of when RBS issued the prospectus on its rights issue, which could be seen as the deadline for claims under a statute of limitations under UK law.

Investors who spent more than 500 million pounds buying RBS shares in May 2008 have also joined the RBoS Shareholder Action Group in recent weeks, a person familiar with the group said. That group represents about 100 institutions and 12,000 retail investors.

"There is something of a mad rush, as you can always expect in these situations," said one lawyer working on the case. ($1 = 0.5953 British Pounds)

(Additional reporting by Kirstin Ridley; Editing by Sophie Walker)