banking

RBS sued by ING, Illinois teachers over 2008 rights offering

BLOOMBERG FILE PHOTO/SIMON DAWSON
LONDON-BASED Royal Bank of Scotland Group Plc has been sued by a group of 21 pension funds and investment firms.
Posted 3/29/13

LONDON - Royal Bank of Scotland Group Plc was sued by a group of 21 pension funds and investment firms claiming the lender misled them about its finances when selling new shares in 2008, months before a government bailout.

Lawyers representing trusts run by ING Groep NV and John Hancock Financial Services Inc., as well as retirement funds for British mineworkers and Illinois teachers, filed a lawsuit at a London court today, according to an e-mailed statement.

RBS made misleading statements to investors ahead of its rights issue and didn’t reveal weaknesses in its balance sheet, Stewarts Law LLP said in the statement.

“Although the prospectus portrayed an image of the bank being in a state of financial good health and stability, the reality was very different,” lawyers said in the statement.

The law firm didn’t specify what damages the shareholders are seeking, beyond saying the suit is for “millions of pounds.”

RBS is 81 percent owned by British taxpayers after getting the world’s biggest bank bailout -- 45.5 billion pounds ($68.8 billion) -- in 2008 and 2009. The lender had raised 12 billion pounds from investors in the share sale before collapsing under the weight of bad loans.

Michael Strachan, a spokesman for Edinburgh-based RBS, declined to comment.

Another group of RBS shareholders, including about 12,000 small investors, are planning a separate class-action lawsuit in the U.K. over the rights issue. Their spokesman Locksley Ryan said in a phone interview that the claim wasn’t yet ready to be filed.

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