RBS
Royal Bank of Scotland failed the Bank of England's stress tests last week. Reuters

Royal Bank of Scotland (RBS) has set aside £800m ($1.02bn) after reaching an agreement to settle claims from shareholders, who claimed the bank misled them during its £12bn fundraising in 2008.

In a statement released on Monday (5 December), RBS said that in order to minimise "further material litigation expense and management distraction and without any admission of liability" RBS has concluded a full and final settlement with three out of the five shareholder groups involved in the claims.

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The three groups represent 77% of the combined £4bn worth of claims brought against the bank, which stated it hopes to reach an agreement with the other two.

"We have been very clear that we wanted to deal with as many of our legacy litigation issues as possible during 2015 and 2016," said group chief executive Ross McEwan.

"We are pleased to have reached this agreement and hope that it will be accepted by the remaining claimant groups so that this long course of complex and costly litigation can now be concluded."

The bank added the £800m would be covered from its existing provisions.

In August this year, the FTSE 100-listed lender had set aside £700m for the case, after unsuccessfully trying to come to an agreement the previous month, and a trial date has now been set for March next year.

RBS, which is still 73%-owned by the taxpayers following its £45bn bailout in 2008, is also facing a penalty of up to £8bn from the US regulator over its mortgage bond selling practices 10 years ago.

Last week, the bank failed the latest Bank of England stress tests and will now have to take action to bolster its cash reserves to protect itself in the event of a new financial crisis.

RBS issued a plan to Threadneedle Street in which it committed to inject approximately £2bn of fresh capital into its cash reserves. The plan has already been accepted by the Prudential Regulation Authority, which will continue to monitor the bank's progress against its revised capital plan.

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