RBS and Goodwin face potential 3.3bn legal battle

Royal Bank of Scotland could be in for a bruising legal battle with angry shareholders according to several reports on Monday.

According to the Times, a group known as the RBoS Shareholders Action Group is gearing up to sue the bank as well as its former Chief Executive Fred Goodwin and former Chairman Tom McKillop.

The shareholders will argue that senior management misled them during a crucial rights issue in 2008 over the fragility of RBS's balance sheet.

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Since the time of the rights issue, when RBS shares went for £20, they have fallen by around 90% to 226p.

The newspaper claims the shareholders need to raise £15m to pay for a possible defeat in court; but with the likes of HSBC and Deutsche Bank said to be interested in taking part, achieving that figure seems likely.

The action raises the tantalising prospect of Fred "the shred" Goodwin taking the stand to defend the actions that led to the £45.5bn government led bailout, the biggest bank rescue in world history.

BS