Goodwin may escape witness box as RBS nears investor settlement

Royal Bank of Scotland (LSE: RBS.L - news) is closing in on a £200m-plus settlement with thousands of investors over its ill-fated 2008 cash call - a move that would spare former boss Fred Goodwin from two days of courtroom scrutiny.

Sky News has learnt that RBS and lawyers for a shareholder claimant group were nearing an agreement that could bring an end to years of pursuit over the £12bn rights issue launched by Mr Goodwin just months before the lender needed rescuing by British taxpayers.

Crucially, Trevor Hemmings, the multimillionaire businessman funding part of the claim, is said to have decided that RBS's 82p-a-share proposal - tabled by the bank's current chief executive, Ross McEwan, on Sunday - was sufficient to justify settling.

The trial, which had been due to get under way on Monday morning at the High Court in London, was adjourned to enable both sides to engage in further settlement negotiations.

Several uncertainties remained on Monday evening that meant a settlement could not be guaranteed, insiders cautioned.

One person said it was possible that alternative funding could be lined up to allow those investors determined to see the trial proceed get their wish.

If an agreement can be reached, it is likely to be announced on Monday evening or, more likely, Tuesday.

Sources said it would probably cost RBS more than £200m based on an 82p-per-share settlement, although the final figure could vary according to interest payments and was unclear.

Talks between lawyers acting for both sides continued throughout Monday after RBS doubled the value of its offer to investors, just hours before the trial was due to start.

Mr McEwan is said to have personally helped deliver the offer to lawyers acting for the former shareholders, many of whom rank among RBS's current workforce.

The proposal represents the latest in a string of last-ditch efforts by RBS to avoid the lead-up to its 2008 cash call being played out in public.

Mr Goodwin, who was ousted as RBS's boss as it was being bailed out with £45bn of taxpayers' money later that year, is due to give evidence on 8 June - the first time he will have given a full account of the crisis at the bank.

Roughly 9,000 small investors, as well as some institutions, have been determined to press ahead with their claim even as a number of other claimant groups settled for just over 40p-a-share.

Some members of the RBoS Shareholder Action Group have become increasingly willing to settle but are said to have been holding out for a deal worth at least 92p-per-share, just under half of what investors paid in the ill-fated rights issue.

Others, however, are determined to see Mr Goodwin and his former senior colleagues give a public account of their actions.

RBS has reached settlements with four other claimant groups in recent months, representing more than 80% of the total claims by value, and had set aside up to £800m to bring an end to all of the shareholder legal claims.

The investors allege that RBS, under Mr Goodwin's leadership, misled them about the state of the bank's finances when it raised billions of pounds from them just months before it had to be rescued.

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

The Government continues to own more than 70% of the bank, and there is little prospect of it ever recouping the money it paid to avert its outright collapse.

Most of the 27,000 members who were originally part of the RBoS Shareholder Action Group were ordinary retail investors who lost money after subscribing to the new RBS shares.

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.

Those legal fees have drawn criticism from investors and politicians, but were defended by Sir Howard Davies, RBS's chairman, at its annual meeting earlier this month.

Sir Vince Cable, who was business secretary in the 2010-15 coalition government, described the legal bill as "obscene".

RBS and the shareholder action group both declined to comment on Monday afternoon.