Five UK institutional investors, including the Universities Superannuation Scheme (USS), are set to launch a legal challenge against the Royal Bank of Scotland (RBS) over a 2008 share issue, IPE understands.
Joining USS are Legal & General Investment Management (LGIM) and insurers Standard Life and Prudential.
The fifth claimant, as first reported by news agency Reuters, is believed to be Aviva Investors.
The case relates to a £12bn (€14.6bn) share issue from RBS at the end of April 2008, the largest in UK corporate history, which the bank undertook to shore up its finances after the controversial takeover of Dutch bank ABN AMRO.
The investors argue the bank misled them into increasing their shareholdings and are seeking compensation from the losses resulting from the fall in share price since.
Around six months after the group bought further shares in RBS, the bank was bailed out by the UK government, which now retains an 81% stake.
Referred to as the ‘Quinn Emmanuel group’ after the representing law firm, the institutions are expected to file the case with the UK High Court on Wednesday, the sixth anniversary of the share issue.
All five institutions declined to comment on the case.
The lawsuit is expected to be the tune of £1bn in compensation from the bank. However, IPE understands the exact split among the five claimants is yet to be decided.
RBS’s trading share price at the time of the issue was £34.6, before plummeting to £4.94 by the end of the year, after the government bailout.
The case follows on from a group of more than 100 institutional investors making a similar case in April 2013.
The RBS Shareholder Action Group filed a case with the High Court against the bank and four former directors, seeking damages for “inexcusable actions”.
A statement from the bank regarding the imminent lawsuit said that, while it made decisions that have been criticised, it never acted illegally.
“This does not mean the company or directors misled investors or acted illegally,” the statement said.
“We believe we have strong defences to the claims that are being brought against the bank, and that is why we intend to defend these vigorously and to protect the interests of our shareholders, including UK taxpayers.”