LONDON (Reuters) - A group representing investors in Royal Bank of Scotland (RBS.L) plans legal action to recover at least 2.4 billion pounds ($3.8 billion) lost when they bought shares in the bank shortly before it fell victim to the financial crisis.
Mike Neill, who is coordinating the legal action on behalf of the RBoS Shareholders Action Group, said on Monday the claim was backed by 7,400 investors, including charities and churches, and more were expected to join.
A legal source with knowledge of the process said London law firm Bird & Bird will send a letter of claim to the bank on Monday on behalf of the shareholders who subscribed to the share issue.
A source at RBS said the bank had not received the letter or been served with proceedings.
Investors are making the claim against the bank and former directors including Fred Goodwin, chief executive of RBS before it was rescued by the British taxpayer, Neill said.
“We are just anxious to bring it to a court and to get Mr Goodwin and others into a witness box to ask them certain questions,” Neill told Reuters.
The claim centers on a rights issue priced at 200 pence a share in 2008. Eleven shares were offered for every 18 held and 95 percent of the 12 billion pound offering was taken up in June.
In the ensuing months, the financial crisis worsened, and RBS launched a further 20 billion pounds capital raising in October, offering shares at 65.5 pence in a deal backed by the UK government, which then became a majority shareholder.
Shares RBS shares currently trade around 26 pence and the government holds about 80 percent of them.
The action group has alleged on its website that the rights issue prospectus was misleading.
“The group considers that it has substantial and credible legal and factual defenses to the remaining and prospective claims, and will defend itself vigorously,” RBS said.
($1 = 0.6372 pound)
($1 = 0.6372 British pounds)
Reporting by Chris Vellacott; Editing by Andrew Callus