RBS sued by shareholders over rights issue

The Royal Bank of Scotland (RBS) is being sued by investors for millions of pounds of losses sustained in 2008, according to reports Thursday.

A total of 21 financial institutions, including the pension funds for miners and electricity workers, are seeking full compensation over the bank's decision to raise £12bn from shareholders just months before it collapsed.

Stewarts Law, the City law firm which is acting on behalf of the claimants, issued a join-writ Thursday on the lawsuit.

"The claimants have suffered loss in respect of the new shares as a result of untrue and misleading statements in the prospectus," the eight-page writ stated.

"Under FSMA [Financial Service and Markets Act 2000] section 90, RBS is liable to pay compensation to each of the claimants for its losses, amounting to the difference between the price paid for the new shares and their actual value. The claimants will say that such difference was the whole or a substantial part of the price paid."

The claimants include the Coal Staff Superannuation Scheme, the Trustees of the Mineworkers' Pension Scheme, the Electricity Pensions Trustees, and a series of individual ING funds.

The lawsuit is the first of its kind in the UK amid a banking crisis.

It comes as another blow to the RBS which proved to have the biggest capital shortfall among the UK's major banks, according to Sir Mervyn King's estimates Wednesday.

RBS, which is 82% owned by taxpayers, accounts for about £6bn of the £25bn capital shortfall outlined by the Bank of England's Financial Policy Committee.

RD