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RBS talks to settle Goodwin trial hindered by missing investors

Wednesday, May 24, 2017 - 23:22

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Royal Bank of Scotland Group Plc continues to make progress toward settling a lawsuit linked to the lender's near collapse during the financial crisis, according to a lawyer for bank investors who pushed back against reports that talks had faltered.

[LONDON] Royal Bank of Scotland Group Plc continues to make progress toward settling a lawsuit linked to the lender's near collapse during the financial crisis, according to a lawyer for bank investors who pushed back against reports that talks had faltered.

Efforts to reach a final deal were hindered as lawyers struggle to contact some RBS shareholders, Jonathan Nash said at a London court hearing Wednesday where a judge agreed to delay the start of the trial for a third time.

Mr Nash said he was "pleased to report that progress towards a settlement remains good and we remain hopeful." He attributed the failures to sign a final accord to "logistical problems." RBS doubled its offer to investors as Chief Executive Officer Ross McEwan staged an 11th-hour personal intervention over the weekend, a person with knowledge of the matter has said. The trial, which was due to start Monday, has been postponed until June 7 while the claimants weigh the improved proposal and their lawyers locate the missing investors.

Taking the case to trial could force the state-owned bank to relive an ugly period during the 2008 financial crisis, when ex-CEO Fred Goodwin held a £12 billion (S$21.6 billion) emergency rights offering only for the bank to be rescued months later in a record government bailout. Investors who participated in the rights offer say that the bank misled them and their shares were largely wiped out by the bailout.

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The court will hold an additional hearing for a progress report Thursday. Reuters reported late Tuesday that a number of shareholders in the 9,000-strong group remained determined to reject RBS's latest offer.

It would be "fundamentally wrong" for an action to proceed on behalf of claimants whose whereabouts are unknown, Judge Robert Hildyard said during the hearing. "I regard this as a matter of substantial importance." RBS increased its offer to 82 pence per share, up from earlier settlements of 41.2 pence and 43.2 pence with other claimants in the class action suit, the person familiar with the matter said. The Edinburgh-based bank had already inked settlement deals with three investor groups suing over the rights offer.

Mr Goodwin is scheduled to testify next month, in what would mark a rare appearance for the Scottish banker who's become something of a cartoon villain for many of the UK investors who sued.

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