MPs prepare for RBS probe over soaring legal bill

Royal Bank of Scotland is facing yet another blow to its reputation after MPs told bosses at the Edinburgh-based lender that they may face a parliamentary inquiry into the ballooning sums that the still 73 per cent taxpayer-own bank is spending to defend itself and disgraced former boss Fred Goodwin.

RBS is contesting claims made by its shareholders relating to its controversial 2008 rights issue overseen by Mr Goodwin, and now Labour’s Rachel Reeves and Wes Streeting and Conservative Jacob Rees-Mogg, are demanding that the bank justify the “fortune” spent on the case when they unveil first quarter results tomorrow.

The latest accounts will show that RBS’s legal costs are now set to hit £125 million – including £6.5m spent on defending Mr Goodwin and three other former directors.

The case, which has seen RBS prepare one of the most costly defences in British legal history, centres around shareholder allegations that the bank misled them about its financial health prior to the 2008 rights issue, which was followed shortly after by a colossal £45bn taxpayer bailout that sent shares crashing to levels from which they are still to recover.

The case comes to trial next month and Mr Goodwin, who was stripped of his knighthood following the bank’s near-collapse, will take the witness stand on 8 June.

The MPs’ criticism has also focused on current chief executive Ross McEwan who has been asked to explain comments made apparently criticising staff taking part in the class action suit.

They have suggested a committee inquiry could be launched into the matter when the case is over.

Mr Streeting said: “RBS is waging a legal war against 27,000 small investors who have spent years trying to get justice. It’s both a grotesque waste of money and a bullying tactic. And it’s all the more concerning because taxpayers are footing the huge bill.”

Ms Reeves said: “If RBS loses this case, the bank will have a lot of explaining to do to staff, shareholders and the public on why it spent a fortune on this case.”

Mr Rees-Mogg added: “This affair is being closely watched by members of the Treasury select committee and is the type of issue the committee may well look into once legal proceedings are completed.”