RBS faces £4bn lawsuit as govt makes reprivatisation noises
Officials keen to sell taxpayers' 82 per cent stake back to private sector before 2015 election
THE Royal Bank of Scotland and former executives including Fred Goodwin (above) are facing a £4 billion lawsuit from investors after the RBS Shareholders Action Group raised £20m from litigation funds to place a bond with the court to cover RBS' legal costs if their case fails.
According to the Daily Mail, nearly 100 institutions and 12,000 individuals are now likely to file the suit before Christmas alleging that directors misled them into taking part in its £12bn rights issue in 2008, casuing them to lose money. RBS says it will "defend itself vigorously" against the accusations.
Meanwhile, according to Sky News, the FSA has told RBS chief executive Stephen Hester he should consider selling its giant US retail banking arm, Citizens, and reducing its controversial investment banking operations. The regulator told Hester that selling Citizens and radically reducing the size of its global banking and markets operation would be helpful in beefing up the capital position of the government-owned bank.
The communication was part of a broader message that came with the regulator's approval for the bank to exit the Asset Protection Scheme designed to insure the bank against losses on more than £275bn of toxic assets.
Leaving the scheme is regarded as a key first step on the way to the government being in a position to begin selling its 82 per cent stake back to the private sector, says the Financial Times.
The paper says government officials appear serious about reprivatisation before the 2015 general election - even if RBS shares remain well below the value of the original investment. One key figure involved in discussions said: "It is pretty clear that everyone wants to sharpen pencils now to prepare for a sale to the great British public in the next year or so." ·