FRED “the Shred” Goodwin has escaped a summons to a London court to explain his role in the collapse of Royal Bank of Scotland (RBS) after disgruntled shareholders accepted a £200 million settlement.
It ends weeks of uncertainty over the saga and avoids shamed Goodwin and three of his fellow former directors having to explain their part in the run-up to the £12 billion rights offer which turned toxic and led to the taxpayers’ £45.5bn bailout in October 2008.
The RBoS Shareholder Action Group, which represents around 27,000 investors, had said last week it would accept an offer of 82p per share from RBS chief executive Ross McEwan which, although double what previous shareholders had settled for, is still a long way from the 200-230p per share they paid before the financial crash.
Around 12 per cent of the group said they would continue the action after the man funding the RBoS case – millionaire businessman Trevor Hemmings – indicated he would accept McEwan’s offer. Those holding out faced the prospect of raising more than £7m to continue it.
These “diehards” wanted RBS to improve its offer and some were also determined to see Goodwin in court. They met McEwan last week, but he refused to increase his 82p offer.
RBS has not commented on the latest developments.
A spokesman for the shareholder action group said yesterday: “The directors met last night to consider the legal advice. They’ve accepted that advice and the matter will not now proceed to trial.”
Neil Mitchell, a Scots businessman who is involved in a separate fight with RBS over the activities of its Global Restructuring Group, said he had met funders in London on Monday evening to try to secure the cash needed to keep the case going.
He said: “It’s really odd, why have the group accepted?”
The civil case will still call at the High Court today, when Jonathan Nash QC will deliver an update on the proceedings to Mr Justice Hildyard. It had been due to begin on May 22 and last for 14 weeks, Hildyard had granted a series of adjournments to allow settlement discussions to continue between investors and the bank.
Goodwin oversaw the biggest deal in financial services history when he led a consortium in the £49bn takeover of Dutch lender ABN Amro in 2007, which seriously depleted RBS reserves.
RBS announced the rights issue in April the following year and put its insurance businesses up for sale. In August 2008, it reported its first loss in 40 years – £691m in six months.
RBS was bailed out in October, when Goodwin, whose presence had become as toxic as the deal that led to the bailout, left RBS.
He was stripped of his knighthood in 2012.
The case focussed on investors’ losses when RBS was bailed out following its rights issue.
Investors – many of whom are current and former RBS employees – had argued that RBS, Goodwin and three other former directors misled them about its financial health during the cash-raising exercise.
They had claimed £520m, the value of their lost investment plus interest, which took the total to £800m.
RBS disputed that it had covered up any of its actions, saying the rights-issue prospectus included all the information investors needed.
It added that the claimants were overlooking how volatile markets were in 2008.
Goodwin has kept a low profile since leaving RBS, but is known to spend much of his recreational time golfing at Archerfield Links in North Berwick.
His last public appearance was before the Treasury Select Committee in February 2009, when he offered MPs his “profound and unqualified apology for all of the distress that has been caused”.
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