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UK institutions begin hearing against RBS over £12bn share issue

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Five UK institutional investors challenging the Royal Bank of Scotland (RBS) over a £12bn (€15bn) share issue in 2008 have begun legal proceedings against the bank in a court in London.

Pension fund Universities Superannuation Scheme (USS), asset managers Aviva Investors and Legal & General Investment Management (LGIM) and insurers Prudential and Standard Life will commence legal proceedings today in London’s Royal Courts of Justice (RCJ).

Today’s case management hearing is a pre-argument meeting of the two parties, with legal cases to be put forward soon after, IPE understands.

The legal challenge relates to the institutional investors allegedly being misled at the issue that RBS announced in order to shore up its books after a controversial takeover of Dutch bank ABN AMRO.

RBS was bailed out by the UK government only months later.

The institutions, represented by legal outfit Quinn Emmanuel, are set to argue that misleading information was provided as the bank asked shareholders to increase stakes in the April 2008 share issue.

At the time of issue, RBS was trading at £34.60 per share, which then plummeted to £4.94 by the end of 2008.

The bank faced near collapse around six months after the £12bn share issue, only to be bailed out by UK taxpayers, with the government still retaining an 81% stake.

The lawsuit is expected to be the tune of £1bn in compensation from the bank.

However, when the case was launched in April this year, the exact split among the five claimants was yet to be decided.

The case follows on from a group of more than 100 institutional investors making a similar case in April 2013.

RBS, USS, Prudential, LGIM and Aviva Investors all declined to comment further on the latest meeting regarding the case.

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