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
Arts and Entertainment
musicOfficial chart could be moved to accommodate Friday international release day
Sport
Wes Brown is sent-off
football
News
i100
Sport
Italy celebrate scoring their second try
six nations
Sport
Glenn Murray celebrates scoring against West Ham
footballWest Ham 1 Crystal Palace 3
Arts and Entertainment
Drake continues to tease ahead of the release of his new album
music
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003
Barbara Woodward: Britain's first female ambassador to China intends to forge strong links with the growing economic superpower

Our woman in Beijing builds a new relationship

Britain's first female ambassador to China intends to forge strong links with growing economic power
Courage is rare. True humility is even rarer. But the only British soldier to be awarded the Victoria Cross in Afghanistan has both

Courage is rare. True humility is even rarer

Beware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
Alexander McQueen: The catwalk was a stage for the designer's astonishing and troubling vision

Alexander McQueen's astonishing vision

Ahead of a major retrospective, Alexander Fury talks to the collaborators who helped create the late designer's notorious spectacle
New BBC series savours half a century of food in Britain, from Vesta curries to nouvelle cuisine

Dinner through the decades

A new BBC series challenged Brandon Robshaw and his family to eat their way from the 1950s to the 1990s
Philippa Perry interview: The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course

Philippa Perry interview

The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course
Bill Granger recipes: Our chef recreates the exoticism of the Indonesian stir-fry

Bill Granger's Indonesian stir-fry recipes

Our chef was inspired by the south-east Asian cuisine he encountered as a teenager
Chelsea vs Tottenham: Harry Kane was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope

Harry Kane interview

The striker was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope
The Last Word: For the good of the game: why on earth don’t we leave Fifa?

Michael Calvin's Last Word

For the good of the game: why on earth don’t we leave Fifa?
HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?