RBS shareholders plan to take legal action against bank

A group of shareholders of Royal Bank of Scotland (RBS) today said it is planning to take legal action against the bank for allegedly misleading the investors in its May 2008 rights issue prospectus.

The RBS shareholders' action group said it is doing the necessary research and analysis of the voluminous financial information published by RBS with the assistance of forensic accountant Paul Klumpes and is also taking some legal advice on the matter.

"It may yet be some weeks before a claim is ready to submit," the shareholders action group said, adding that "we are so far only raising funds to cover the initial stages of formulating a claim."

The meeting of the RBS shareholders' action group was held on October 10.

Regarding the rights issue the shareholders action group said, "It is likely that the fund raising (the largest ever UK rights issue) was more of a bail-out to cover the cost of the ABN-AMRO acquisition and looming financial problems and further toxic asset write-downs, rather than the 'spin' put on it."

Shareholders may also have other claims based on possible inaccuracies in the disclosure of the financial position of the company in the last three years.