RBS holders called on for rights issue 'battle'

Small shareholders in Royal Bank of Scotland are being urged to join an action group which has been formed to consider legal action against the nationalised bank.

The activist group is concentrating on RBS's £12 billion rights issue which was launched at 200p a share in May 2008. It points out that even though that was a 35% discount to the then share price, RBS shares have subsequently tanked and traded as low as 20p.

Under the auspices of Roger Lawson, a well-known campaigner with the UK Shareholders Association, thousands of small shareholders are being asked to register their interest in a potential class action against the bank. The RBOS Shareholders Action Group said it believed the rights issue was "promoted on a misleading basis".

The group said "at the time of the rights issue, the company's assets were overstated and liabilities were understated".

It added: "The rights issue was clearly insufficient and subsequently the company has had to take substantial funds from Government to cope with further writedowns.

"This has resulted in the massive dilution of shareholders' interests and the Government now has a financial stake of 95% in the business. Effectively the business has been nationalised in all but name."