THE Royal Bank of Scotland has become embroiled in a multi-million pound lawsuit following a decision to withdraw an investment by ABN Amro, which it now owns.
The Dutch bank had agreed to invest £199 million in a London hedge fund but RBS withdrew the deal after taking over ABN.
But hedge fund Merebis Capital Management has now filed a case in London's High Court claiming it is owed a penalty fee of £1
7.8m for the early withdrawal by ABN.
It is the latest blow to RBS, which recently shored up its finances with a £12 billion cash-call to investors.
And it comes after the collapse of the £400m sale of ABN's Australian and New Zealand businesses.
In documents filed with the court, Merebis claims that ABN agreed not to redeem its investment for three years, subject to exceptions, when it injected the £199m to get the hedge fund started last July – just as the consortium led by RBS was gearing up its £57bn bid to take over the bank.
In April, six months after the RBS takeover of ABN's investment bank, they asked for the money to be paid back at the earliest possible date, which was the start of this month.
Merebis said it has asked for a ten per cent penalty fee for early withdrawal, to which it claims it is entitled and which it has as yet not been paid.
RBS has denied liability and said it disputed that any amount was payable, but the legal action has come as a fresh blow following the collapse of several high-profile asset sales.
Sir Fred Goodwin, the RBS chairman, was facing increasing investor concern today after talks over the mooted £400m sale of ABN Amro's Australian and New Zealand businesses collapsed.
National Australia Bank, which owns the Clydesdale bank, announced late yesterday that it had quit negotiations to buy the wholesale and investment banking operations that RBS acquired in the takeover.
It is understood the price tag of around £600m was considered too high.
It came just weeks after Zurich Financial pulled out of the multi-billion pound auction of RBS's insurance arm.
The full article contains 366 words and appears in Edinburgh Evening News newspaper.
