• The ABN AMRO acquisition was portrayed as going well in the RBS prospectus, whereas in reality it was not.
• RBS was required to disclose its capital ratios and did not.
• RBS failed to make adequate goodwill impairment writedowns in relation to ABN AMRO in circumstances where the goodwill had not been tested for impairment, in spite of severe market instability.
• RBS’s risk management and control systems were found to be fundamentally flawed
• The group failed to disclose its reliance on $11.9bn (£7.9bn) in loans provided by the US Federal Reserve.
Source: RBoS Shareholders Action Group
Timeline of events
• February 28 2008: Fred Goodwin was quoted as saying, “I think the main news is that with our view of all the businesses, the positive view that we have of the ABN businesses has been confirmed,” and “There are no plans for any inorganic capital-raising or anything of the sort.”
• February 29 2008: RBS drew down $706m from US Federal Reserve emergency funds.
• April 3 2008: RBS informed the FSA that it was likely to have fallen below individual capital guidance levels at the end of March.
• April 9 2008: Hector Sants, the chief executive of the FSA at the time, indicated the authority would need written confirmation from RBS that it would be pursuing a rights issue.
• April 22 2008: RBS announces a £12bn rights issue. RBS failed to disclose to shareholders and the market that it had found it necessary to draw on $11.9bn in loans from the Federal Reserve.
Source: RBoS Shareholders Action Group
RBS’s rebuttal
In a statement, RBS said: “While RBS and its former directors made some business decisions that have been criticised, this does not mean that they misled investors or acted illegally.
“We believe we have strong defences to the claims that are being brought against the group and that is why we intend to defend these vigorously and to protect the interests of our shareholders, including UK taxpayers.”
