Royal Bank of Scotland is bracing for a costly court battle with shareholders that is to see former boss Fred Goodwin defend his role in the lender’s near collapse during the financial crisis.
Mr Goodwin and a raft of former executives face a public grilling as part of a £700 million lawsuit brought against the lender by 9,000 retail investors and 18 institutions in the RBS Shareholder Action Group.
While settling the lion’s share of the claims out of court, RBS is now heading for a 14-week trial which begins on Monday.
The disgraced former CEO - whose knighthood was stripped following the bank’s near collapse - will answer questions over the events leading up to the Government’s £45.5 billion bailout nine years ago.
The legal action centres on a rights issue overseen by Mr Goodwin in April 2008 when RBS asked existing shareholders to pump £12bn into the bank after leading a consortium that spent £49 billion on Dutch bank ABN Amro.
Shareholders claim they were left nursing hefty losses following the cash call after RBS shares plunged 90% and the Government was forced to step in when the deal turned toxic.
The bank has been unable to strike a deal with the last tranche of shareholders, with any chance of a last-ditch settlement proving a distant hope.
Now, however, there is set to be more argument about the cost of the affair to the bank and consequently to the public purse.
The bank is legally obliged to provide lawyers for the former directors, but those costs have drawn sharp criticism, as they head towards £125m - including £6.5m defending Mr Goodwin and the ex-RBS bosses.
Three members of the influential Treasury Select Committee warned in April that RBS could face a parliamentary inquiry into the spiralling legal costs, which will make it one of the most costly civil defences in British history.