RBS faces fresh wave of claims in shares sale legal fight

However, a further 1,300 members of the shareholder action group – including 800 current and former RBS staff members – were time-barred from taking part in the legal bid because they signed up after the June 2014 cut-off date.

Those so-called late claimants are now seeking to proceed with a case that will look to prove that RBS executives deliberately concealed the bank’s true financial position at the time of the rights issue and thereby duped shareholders into taking part in it.

They argue this means the six-year time-limit on such claims should not apply as normal.

If successful, it could lead to thousands more claims for compensation from investors.

A spokesman for the RBoS Shareholder Action Group said that “an eminent QC in the area of banking and securities law” has told the late claimants that they have a good case.

They claim that they have “evidence of deliberate concealment” allegedly uncovered during disclosure for the original case.

Under the rights issue, shareholders were asked to pump £12 billion into the bank, which was leading a consortium that spent £49bn on Dutch lender ABN Amro.

Shortly afterwards, RBS had to be bailed out by the UK Government to tune of £45.5bn, leading shareholders to claim they had been misled about the bank’s financial health when they answered its cash call.

Existing legislation states that claims have to be brought within six years of the event being complained about – in this instance the rights issue – taking place.

But the shareholders' spokesman said: “When there’s evidence of concealment the normal six-year rule on limitation is waived or vacated and that will allow these people to have their claim admitted."

If the case is successful, the six-year limitation period would be deemed to have begun at the time the alleged deliberate concealment was uncovered, which according to the action group was last year. That would mean potentially thousands of time-barred shareholders would be eligible to seek compensation from the bank.

The main action group had planned to argue the concealment case in court earlier this year but was forced to abandon the claim as part of the settlement agreement.

That meant that those running the bank at the time of the rights issue, including disgraced former chief executive Mr Goodwin, did not have to appear in court.

RBS, which did not admit liability as part of the June settlement, agreed to pay the claimants 82p per share. The shares had cost in the region of £2 to buy.

The firm said yesterday it would defend any future claim.

A spokesman for RBS said: “Our consistent position has been that we consider all new claims issued to be time barred and we will vigorously defend the claims on that basis.”

One of the terms of the earlier settlement was that the RBoS Shareholder Action Group could not take any further action against the bank.

However, the late claimants, who were not part of the original action, have formed a new entity that is in the process of incorporating as a company so it can pursue the claim separately.

They are then planning to instruct lawyers and have been meeting potential firms with a view to launching legal action.

The group is also seeking "after-the-event" insurance funding to allow them to pursue the case.

Without such funding, the individual shareholders would be liable for RBS’s legal costs if the case proceeded and the bank won.

This would potentially leave the claimants with a bill likely to run into millions of pounds if they took action but lost their case.

However, it is extremely difficult to secure funding for cases because insurers face bearing all costs in the event of a loss.

In the June case, RBS raised its offer to 82p per share from about 43p the day before the case was due to go to trial.

After the original case was settled in June, the action group said that they had been "vindicated".

Speaking at the time, a spokesman said: "Our decision and resolve to press on has been vindicated by this settlement, which is twice that accepted by others who had much greater resources than us."

ANALYSIS

THE group of Royal Bank of Scotland shareholders looking to launch a fresh legal claim against the bailed-out bank will face an uphill struggle to have their day in court.

As was proved earlier this year, when the bank agreed an 11th-hour settlement with the RBoS Shareholder Action Group rather than have its former executives answer questions about its 2008 cash call, the bank has deep pockets when it comes to fending off legal challenges.

Not only was it able to find the funds to pay the group 82p per share when those who settled last year got just 43p, but it also had the wherewithal to run up £129 million in legal fees by engaging no fewer than 13 barristers and what High Court judge Mr Justice Hildyard termed “serried ranks of solicitors and paralegals”.

This is why the new action group will have to be able to secure litigation funding if the case is ever to get off the ground. Without it the shareholders, some of whom have already lost so much, would be exposed to enormous losses if they became liable for RBS’s costs.

Doing so may be easier said than done. The original group, which ended up being funded by a large corporate claimant, who accepted the settlement offer, passed through three different teams of legal advisers before making it to the doors of the court, with disagreements about funding understood to have been the driver for the changes.

The new group may also find its numbers begin to diminish once its intentions have been made clear, with some late-claimants, who paid subscription money to join the original group, apparently in the dark about what the new group intends to do.

One such shareholder said he had asked for his £600 fee back after being told he was not eligible for a share of the 82p-a-share settlement while another, who has left his £330 sub with the group for now, did not have any knowledge of the potential new claim.

Though it is small beer in comparison to the sums RBS is likely to rack up, every penny counts when it comes to establishing a fighting fund. If the late claimants start to vote with their feet this is one fight that may well never get started.