Goodwin holds breath as RBS eyes cash call case settlement

Royal Bank of Scotland (LSE: RBS.L - news) (RBS) has accelerated talks about a legal settlement with thousands of former investors, weeks before a trial that would see former chief executive Fred Goodwin called to give evidence.

Sky News has learnt that RBS's lawyers have been in negotiations with the RBoS Shareholder Action Group during the last 48 hours in a bid to resolve the final remaining claim relating to a £12bn cash call in 2008.

Talks were understood to be continuing on Friday, although one source put the chances of a successful resolution before a trial at "no better than 50-50".

The development comes just days after the judge overseeing the case ordered the claimant group to disclose further details of its funding amid concerns that it would be unable to cover legal expenses if it loses.

Mr Goodwin, along with Sir Tom McKillop, the former RBS chairman, are named alongside the state-backed bank as defendants in the case.

If the case does go to trial - which is scheduled to start in May - it would represent the fullest account that Mr Goodwin and senior colleagues would have given about the precursor to a crisis which saw £45.5bn of taxpayers' money injected into RBS.

The Government continues to own more than 70% of the bank, and there appears to be little prospect of it ever recouping the money it paid to rescue RBS.

The terms of any agreement between the two sides were unclear on Friday, although sources said they were unlikely to see any improvement in RBS's existing offer, which would see only a fraction of the group's £1.2bn claim paid out in settlement.

A number of institutional investors participating in the RBoS Shareholder Action Group are nevertheless said to be keen to pursue a settlement, and have made their views clear to Signature Litigation, the law firm handling the case.

Prominent investors including Aberdeen Asset Management (Frankfurt: 899502 - news) and AXA (Paris: FR0000120628 - news) are members of the group, which in total has signed up 27,000 former RBS shareholders as participants.

Most of them were ordinary retail investors who lost money after subscribing to the bank's £12bn rights issue in the spring of 2008.

In December, RBS reached agreement with three of the five shareholder groups suing it for allegedly misrepresenting its financial health.

It said at the time that it was "willing to make available settlement sums of up to £800m assuming settlement of all claims, to be split among all five shareholder groups, subject to agreement and claim validation".

Since then, it has reached a deal with another group, represented by the law firm Leon Kaye, leaving the RBoS Shareholder Action Group as the only remaining litigant.

Vowing to press on towards a trial, the RBoS Group said in December that: "We had no option but to reject this inadequate offer and remain committed to seeking justice for our members through the courts."

RBS declined to comment on this week's talks, but said in a statement: "RBS has set aside £800 million assuming settlement of all claims in its 2008 Rights Issue litigation, to be split among all five shareholder groups.

"The bank has reached terms with four of these groups - representing almost 80% of the value of the claim - and agreed a full and final settlement without any admission of liability."

To date, more than £100m has been spent by the bank defending the claims, a bill which includes the legal costs of Mr Goodwin and other former directors.