By Philip Gates
Three other former Royal Bank of Scotland directors due to be cross examined in case next month that will take in the events of 2008 that led to the bank taking a £45.5bn bailout from the UK Government
Disgraced former Royal Bank of Scotland chief executive Fred Goodwin is set to appear as a defendant in a £700m High Court lawsuit brought by 27,000 retail investors and institutions, it was reported today.
The Financial Times say three other former directors are expected to be cross examined.
The case will take in the events of 2008 that led to Royal Bank of Scotland taking a £45.5bn bailout from the UK government.
Investors claim that they lost money in a rights issue launched in June 2008 that raised £12bn.
They claim the prospectus contained untrue or misleading statements about the financial position of RBS under Goodwin.
Just months later the bank was bailed out.
The FT reports that RBS tried to reach a settlement last Thursday with a large chunk of investors including Aberdeen Asset Management.
The bank has reportedly said it will continue to pursue a settlement with the remaining claimants.
But it added that if it has to it will defend the claims at trial.
RBS is still 72 per cent owned by the UK government.
The FT says former RBS chairman Tom McKillop is expected to be called as the first witness early next month.
He will be followed by Goodwin, whose cross examination is due to start on the day the UK goes to the polls in the general election.
Other former directors the FT named include Johnny Cameron, former head of RBS’s investment bank and ex-finance director, Guy Whittaker, are also down to be cross examined in the trial, along with Matthew Greenburgh, who retired from Bank of America Merrill Lynch in 2010 after advising on RBS’s purchase of ABN Amro.
Politicians have questioned RBS and chief executive Ross McEwan fighting the case.
The Lib Dems' Sir Vince Cable told the FT: “The cost of defending Fred Goodwin and his associates is shocking.
"The government should not be allowing a state-backed bank to spend what is therefore majority taxpayer money on defending one of the architects of the credit crunch and financial crisis.”
Rachel Reeves, Labour MP and member of the Treasury select committee, said: “Ross McEwan must explain to RBS’ investors and the public why his bank is spending millions of pounds of what is ultimately taxpayers’ money on defending Goodwin.”
The RBS litigation is the first of three civil lawsuits filed against UK banks that will pore over their actions during the 2008 financial crisis, the FT says.
Another is a lawsuit against Lloyds Banking Group brought by thousands of investors who complain about the bank’s rescue of HBOS in 2008.