Investors have launched a stinging attack on the Royal Bank of Scotland (RBS) an action group has confirmed.
A large group of investors of around 12,000 people have launched a stunning attack on RBS, which is set to cost the bank around £3.5 billion in compensation.
Among the group of wealthy investors, 90 institutions are also suing the bank; these include charities, churches and private client brokers.
The collection of investors believe they were lied to, to cover up the overall financial health of the bank before it collapsed and required a government bailout in 2008, which has led to the bank being 81% owned by the taxpayer.
Not only is the action group suing RBS, they are also suing ex-executive Fred Goodwin, former chairman Sir Tom Mckillop, along with former senior employees, Johnny Cameron and Guy Whittaker.
This action could cost the bank more than £3.5 billion, with the investors estimating that the final fee could be well in excess of £4 billion.
The investors have said: “The action group maintains that the bank’s directors sought to mislead shareholders by misrepresenting the underlying strength of the bank and omitting critical information from the 2008 rights issue prospectus.
“This means that RBS will be liable for the losses incurred on shares subscribed in the rights issue, by reason of breaches of Section 90 of the Financial Services and Markets Act 2000.”
A spokesman for the action group later stated this: “Today represents a giant step forward for the many thousands of ordinary people who lost money as the result of inexcusable actions taken by banks and their directors in the financial crisis.”
After this stinging attack, RBS have the standard 30 days to respond to claims made by the investors and institutions regarding allegations of the cover-up prior to their collapse.