Final touches made to action against RBS A MULTI-MILLION pound lawsuit against Royal Bank of Scotland will gather pace later this month when a weighty ­legal document is served on the bank alleging investors were misled at the height of the 2008 credit crisis. UK firm Stewarts Law, representing more than 20 major shareholders in RBS, is understood to be putting the final touches to the "particulars of claim" report that alleges the bank published a financially misleading prospectus for its record £12 billion rights issue. That cash call on shareholders shored up RBS's balance sheet in the wake of its disastrous £47bn consortium take-over of Dutch bank ABN Amro in the autumn of 2007. One source familiar with the legal action by international institutional investors and pension funds said: "The particulars of claim document will be served on RBS's lawyers by the end of July. It has been eagerly awaited as it will go into far more detail than the first document filed in March, which was only a broad outline of the allegations. The lawsuit could be worth hundreds of millions of pounds to shareholders if the High Court rules that RBS and its directors at the time, led by ousted chief executive Fred Goodwin, misrepresented the financial position of the company. RBS has hired top City law firm Herbert Smith Freehills to defend legal actions related to the rights issue, which include the much bigger £4 billion claim from the RBoS Shareholders Action Group. The latter action, backed by nearly 100 past and present institutional investors, also represents 12,000 small shareholders. A spokesman for RBoS Shareholders Action Group said a High Court case management meeting was due towards the end of this month. He said: "This should mean that RBS's defence will need to be lodged soon." The two lawsuits claim the prospectus for the rights issue, which came months before the bank crashed to a £24bn annual loss and was part-nationalised through a £45.5bn tax-payer bailout, misrepresented the bank's capital position. A key allegation is that the RBS board, which at the time was chaired by Sir Tom McKillop, misled shareholders taking up new shares by quoting an end-2007 tier one capital ratio of 7.3 per cent. The shareholders say the actual ratio at the time of the cash call was 6.2 per cent. Capital ratios are the cushions that back a bank's loanbook, and RBS's had fallen to just above 4 per cent as it was about to report the biggest loss in UK corporate history. The legal actions also claim the prospectus failed to clarify that the bank was getting £8bn of emergency funding from the US Federal Reserve and had held talks with Britain's Financial Services Authority about its capital strength. Some legal observers believe the two legal actions may end up being heard together. "It takes away duplication and there are potential cost savings," one said. RBS denies all allegations. Last year US courts found in the bank's favour regarding two legal actions by holders of RBS preference shares and American depositary receipts.COMMENT: PAGE 20