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Royal Bank of Scotland balance sheet significantly worse than first thought

Sources close to the Treasury have suggested that the Royal Bank of Scotland's balance sheet is in a far worse condition than even the most sceptical observers had assumed. They have found a number of significant loans which are outstanding but unlikely to be repaid. There is also speculation of a significant write-down of the company's loan and mortgage book, something which Gordon Brown has been pushing for over the last few days with regards to the general banking sector.

A former lawyer has also instigated a court case against Royal Bank of Scotland's directors suggesting that when he took up his rights issue entitlement he was not given the right information regarding the financial status of the company. He alleges that the company was "insolvent" and this argument is set to go to court over the next few days.

While class actions are commonplace in America and have created substantial competition returns for many investors, they are less popular in the UK. However, there is a feeling that many in the legal profession are waiting to see how this up-and-coming Royal Bank of Scotland case is handled before potentially making moves against various companies. There are some very interesting times ahead for investors and corporate entities throughout the UK.

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