RBS doubles settlement offer to investors with trial hours away

Royal Bank of Scotland (LSE: RBS.L - news) has doubled the value of a prospective legal settlement with investors, just hours before a High Court trial scheduled to hear from the lender's former boss, Fred Goodwin, was due to get under way.

Sky News has learnt that Ross McEwan, RBS's chief executive, authorised the state-backed bank's lawyers to table a settlement proposal on Sunday worth 82p-a-share to thousands of shareholders.

On Monday morning, with the trial due to start , a judge granted a 24-hour adjournment for the case so that both sides could try to agree a last-minute deal.

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 £12bn rights issue in 2008 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.

Insiders said that the 82p-a-share offer would cost RBS an incremental sum worth tens of millions of pounds.

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 declined to comment on Monday, while the shareholder group could not be reached.