Warburg agrees to pay up: Figure totals pounds 35m as bank settles negligence claim by Yeoman

BRITAIN'S largest merchant bank, SG Warburg, yesterday paid pounds 35m to settle the negligence claim brought against it by the Irish leasing group Yeoman International.

In an out-of-court settlement Warburg agreed to paid pounds 33m damages and pounds 2m costs to Yeoman, though it did not admit liability.

Yeoman had been claiming pounds 115m in damages as a result of its disastrous takeover of the rival group CLF five years ago. Yeoman paid pounds 93m for the company but found that it was making large losses and had to launch a rescue rights issue.

It sued Warburg and the City lawyers Linklaters & Paines, which advised Yeoman, for the difference between what it paid for CLF and what, in hindsight, it was really worth. The amount was inflated by interest costs.

Warburg refused to admit how much it paid, saying it would have an insignificant effect on the group's profits, but the true amount emerged in Ireland.

Warburg, though, may only have to bear a small percentage of this, as the lion's share is covered by the bank's professional indemnity insurance at Lloyd's of London.

The other defendant, Linklaters, paid nothing to Yeoman and only has to bear its own costs, which are covered by the Law Society's solicitors' indemnity insurance.

The trial started two weeks ago but was adjourned on Monday last week after barristers' opening statements. Mr Justice Buckley adjourned proceedings to read amended witness statements after Robert Gillespie, the Warburg director who advised Yeoman, said he had made some mistakes in his statements and wished to change them.

The out-of-court settlement is an embarrassment to Warburg, which had always maintained that it was not at fault and had resolutely refused to note the legal action as a contingent liability in its accounts.

It follows the pounds 172m damages awarded against Samuel Montagu, the merchant bank owned by Midland, after it was sued by British & Commonwealth Holdings, which is now in administration.

Montagu had said that a US-controlled financial group, Quadrex, was good for the money when it had agreed to buy two of B&C's subsidiaries, but Quadrex was unable to complete the deal.

Warburg was also censured by the City Panel on Takeovers and Mergers over its advice to the supermarket group William Low, which had announced a deal to take over its rival, Budgens.

The deal fell apart and it was found that Warburg had not pursued offers of financial information from Budgens' advisers, Kleinwort Benson, which might have prevented the debacle.

(Photograph omitted)

Start your day with The Independent, sign up for daily news emails
A poster by Durham Constabulary
Arts and Entertainment
books New York Times slammed over summer reading list
Cameron Jerome
footballCanaries beat Boro to gain promotion to the Premier League
Arts and Entertainment
Performers drink tea at the Glastonbury festival in 2010
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine