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Royal Bank of Scotland class action goes ahead

A group of Royal Bank of Scotland shareholders, by the name of the RBS Action Group, are going ahead with a class-action claim that they were "misled" during and after the Royal Bank of Scotland's £12 billion rights issue last year. The group claim that the directors of the Royal Bank of Scotland failed to make them fully aware of the financial situation regarding the group and the risks of investing further funds.

The Royal Bank of Scotland suffered a collapse last year after the demise of US banking giant Lehman Brothers had a serious knock on effect to the wider sector. Despite the £12 billion rights issue being 95% taken up by shareholders at the time the group was forced to go cap in hand to the UK government for yet more funding. This has seen the UK government take a 70% stake in the business leaving original shareholders with a substantially reduced stake in the operation.

There are concerns that if this particular action is successful we could see similar legal moves against other UK banks which have also been forced to take UK government funding, leaving original shareholders with minimal stakes. It may also call into question the role of the UK government and open the authorities up to potential legal action.

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