Shareholder puts RBS in the dock

19 February 2009

Royal Bank of Scotland (RBS) is being hauled before a small claims court by a disgruntled QC who accuses it of being insolvent when it sold him £1,282 worth of shares last year.

Ian Hamilton claims the struggling bank hid the 'true state of their finances' from shareholders during its £12 billion rights issue. He says the bank should not have proceeded with the cash call, which has cost many investors dearly.

The 83-year-old from North Connel, Aryll and Bute, took up the offer of buying more share on his wife's behalf, purchasing 640 shares at £2 each during the summer. Shares in the beleaguered bank have since tumbled to around 20p. 

He alleges that RBS  was "negligent in representing themselves as solvent at all material times when in fact they were insolvent".

The bank received a £20 billion financial lifeline from the Government in October and is now 68% owned by the taxpayer.

Hamilton railed against the former RBS board led by Sir Tom McKillop and Sir Fred Goodwin. He said : "When you buy shares in a rights issue, you rely upon the prospectus put out by the banks. The bank put out a prospectus in April; I bought my shares in June. By August the bank was bust. I want to know why they didn't know that when they put out their rights issue.

"It is a terrible ineptitude of the previous board of management of the bank," he added.

Hamilton raised the action in the small claims court in Oban where he stands to lose £200 if the judgement goes against him. But he added that the case was not about the money.

He said: "Of course I'd like my £1,282 back, but like everyone else, I would like to know what has been going on. We have had a Parliamentary Committee Inquiry in which everyone has said they were terribly sorry, but they didn't tell us what they had actually done."

Royal Bank of Scotland refused to comment on ongoing legal cases.

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