We’d all like to see Fred on the hook but RBS investors will be wiser to settle

‘Fred Goodwin off the hook again,’ declared the Scottish Daily Record. That neatly summed up one strand of sentiment behind the RBS Shareholder Action Group’s battle for compensation for losses incurred in the bank’s £12 billion rights issue in 2008 — preceding its £45 billion taxpayer bailout, in which any remaining shareholder value was largely wiped out. Investors who believe they were misled by RBS’s directors and the rights-issue prospectus have been campaigning for their money back ever since.

Most have already accepted a rather modest settlement, but some 9,000 have persevered with a case against the bank itself, Goodwin, former chairman Sir Tom McKillop and two other former directors, which was due in court last Monday for a lengthy trial, in which Goodwin et al would have been called to give evidence. That prospect was particularly relished by angry investors who resent Goodwin’s continuing £342,000-a-year RBS pension. But after a last-minute offer from RBS at almost double the previous settlement price per share, the trial was deferred. There’s still a chance it will begin later this week, but most observers now expect the case to settle.

Behind all this is an almighty row about legal costs. RBS deployed a team of lawyers that has run up fees of around £100 million — a figure even the judge Sir Robert Hildyard calls ‘staggering’. The claimants have wealthy backers but face the risk that if they lose they will be obliged to pay a portion of RBS’s costs. So the urge to see Goodwin wriggling on the hook at last is balanced against the urge to avoid that jeopardy.

If I were them, I would — perhaps ruefully — settle. Justice was not brought against the perpetrators of the financial crisis, in the courts or by public inquiry; too much water has now passed under too many bridges to put that right, though history will still judge.