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RBS loses document disclosure case over 2008 cash call

Royal Bank of Scotland Group Plc will have to disclose documents relating to its controversial £12 billion capital increase in 2008 after a judge declined to classify the files as legally privileged and containing confidential information, Reuters reported.

The documents mainly relate to RBS' internal investigations into its U.S. subprime mortgage exposure, as well as into claims by a former employee at U.S. unit Greenwich Capital that the company was overvaluing its fixed-income portfolio, according to the Dec. 8 report.

"New documents, which have now been deemed admissible by the court, are thought to contain [damning] evidence against the bank and its conduct in relation to its RBS Greenwich Capital arm and its exposure to U.S. subprime mortgages," said a spokesman for a group of shareholders suing RBS for allegedly misleading them about the bank's financial state at the time of the fundraising. The claimants are hoping that information contained in the files will strengthen their case against RBS ahead of a trial slated for March 2017.

"Whether or not the bank's subprime exposure was adequately represented in the rights issue prospectus is central to the litigation. This evidence is expected to lead to a major breakthrough for the claimants in this case," the shareholder group spokesman reportedly said.

RBS is considering appealing the ruling, Reuters wrote. The bank announced earlier in the week of Dec. 5 that it reached a settlement with three of the five shareholder groups suing it over the ill-fated cash call. Reuters noted that only institutional investors accepted the offer.